SemGroup Corp. and KKR announced on Thursday a new joint venture to create SemCAMS Midstream ULC, a Canadian midstream infrastructure platform.
The companies also announced that SemCAMS Midstream has entered an agreement to acquire Meritage Midstream ULC and its midstream infrastructure for $440 million.
SemGroup, a Tulsa-based midstream company, will contribute shares and assets of its Canadian subsidiary, SemCAMS, valued at $860 million, in exchange for $460 million in cash proceeds and 51 percent common equity ownership in SemCAMS Midstream.
The transactions create a Canadian growth platform and expand SemGroup'sMontney footprint while deleveraging and strengthening its capital position.
"This transaction captures an attractive valuation for our SemCAMS business and accelerates our Canadian strategy in one of North America's premier energy basins," said Carlin Conner, SemGroup CEO. "The acquisition of Mertiage enables SemCAMS Midstream to expand and optimize its portfolio of assets, broaden its service offerings and create a more attractive Canadian growth platform. In addition, it delivers on our commitment to strengthen our balance sheet."
The acquisition of Meritage Midstream includes its portfolio of approximately 195 MMcf/d of natural gas processing capacity, 101 miles of gas-gathering pipelines, 38 miles of oil-gathering pipelines and 18 miles of emulsion and gas lift pipelines in the liquids-rich Montney play. An additional 200 MMcf/d gas processing expansion is currently under construction and expected to be in service by the third quarter of 2019.
With the acquisition, SemCAMS Midstream will own nearly 900 MMcf/d of natural gas processing capacity.
"Combining SemCAMS and Meritage portfolios will diversify our customer base and broaden our service offerings to include oil batteries and liquids processing, while considerably expanding our gas processing capacity," said Dave Gosse, president of SemCAMS Midstream.
The transaction is expected to close in the first quarter of 2019.
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