Delphi Energy Corp. (DEE:TSX) announced in a news release it agreed to sell and permanently assign a portion of its excess service on the Alliance Pipeline for $11.9 million. The transaction is expected to close on or around Sept. 3, 2019.
The asset Delphi is divesting constitutes about 35%, or 16 million cubic feet per day (16 MMcf/day), of its service to Chicago. Once the deal closes, the net proceeds and reduction in Delphi's outstanding letters of credit related to Alliance will boost the company's liquidity by about $13.3 million.
"The transaction more closely aligns the future natural gas transportation needs of the company with its natural gas production growth projections, given the increased focus on the ultra-rich condensate product mix being developed in West Bigstone," the release noted.
After the transaction, Delphi will have about 29.8 MMcf/day of firm service and 7.5 MMcf/day of priority interruptible service on the Alliance Pipeline system along with roughly 22 MMcf/day of firm service on the NGTL system.
In other news, Delphi's lenders extended the company's $105 million senior credit facility to July 12, 2019, to "complete the annual borrowing base redetermination," according to the release. After closing of the Alliance service deal, the company expects to have bank debt, net of working capital, of about $68 million.[NLINSERT]
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