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.[NLINSERT]
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.