Crescent Point Energy Corp. (CPG:TSX) announced in a news release it agreed to sell gas infrastructure assets in Saskatchewan to Steel Reef Infrastructure Corp. for $500 million in cash. This takes the total amount Crescent will receive from closed or agreed to sales in 2019 to $1.45 billion. Closing of the deal with Steel Reef is expected in Q1/20.
The assets being acquired are nine natural gas gathering and processing facilities and two gas sales pipelines, all in operation and which have a collective throughput capacity of more than 90 million cubic feet per day (90 MMcf/d).
The monetization of these assets will achieve three goals, according to Crescent. It will unlock value for its shareholders, strengthen its balance sheet and allow it "to further focus on our core competencies to strengthen our corporate returns," Crescent Point President and CEO Craig Bryksa said in the release.
According to the agreement, Crescent Point will enter into certain long-term, take-or-pay commitments with Steel Reef in exchange for Crescent Point getting to retain processing rights at the facilities. Steel Reef is a midstream company with other gas processing assets in Saskatchewan.
Also, Steel Reef will fund a 12 MMcf/d expansion of one of the gas processing facilities at a cost of about $30 million (not included in the $500 million purchase price). The expansion, slated to begin in 2020, should "further enhance sales volumes while also reducing the facility's emissions intensity," the release noted.
In other news, Crescent Point continues its efforts to get a new sales oil pipeline developed by a third party. Such a pipeline would bolster the energy company's market access and realized pricing for its oil production out of southeast Saskatchewan.[NLINSERT]
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