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Energy Company to Sell Gas Assets in Alberta
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The acquiring midstream firm will take on completing the facility expansion.

Paramount Resources Ltd. (POU:TSX) announced in a news release it agreed to sell its Karr 6-18 natural gas facility and related midstream assets to CSV Midstream Solutions for $330 million and a $140 million commitment to fund and finish the facility expansion, or D2. The deal should close in July.

The facility, in Alberta's Montney Formation, now has the capacity to compress and dehydrate 100 million cubic feet per day of sour raw gas processing and handle 15,000 barrels per day of raw hydrocarbon liquids. CSV will begin operating the facility upon closing of the transaction and finish the expansion, slated for commissioning in H2/20.

Per the agreement, of the $330 million CSV will pay Paramount, $255 million will be for the facility and about $75 million will constitute reimbursement of capital Paramount spent to date on the expansion project.

Also, Paramount will "enter into a midstream services agreement with CSV that includes a fee-for-service arrangement, a reliability guarantee and a take-or-pay volume commitment that ends 20 years after completion of D2," the release explained. This allows Paramount to continue developing Karr, increase production and maintain a strong balance sheet.

The company will use some of the proceeds from the sale to pay down what it owes on its bank facility, which stood at $827.3 million as of May 31, 2019, and expects to record a gain on sale from the transaction with CSV of about $160 million.


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