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Shell Canada closes sale of upstream, midstream assets to Pieridae

Royal Dutch Shell PLC subsidiary Shell Canada Energy Ltd. completed the sale of its upstream and midstream assets in the southern Alberta foothills to Pieridae Energy Ltd. for C$190 million.

Pieridae paid C$10 million during the signing of the purchase and sale agreement and settled the remaining amount through C$165 million in cash and the issuance of 15.2 million common shares, which have an aggregate value of C$15 million, to Shell, according to an Oct. 17 news release from Pieridae.

The upstream assets produced around 28,634 barrels of oil equivalent per day during the first half of 2019, composed of around 119 MMcf/d of natural gas, 5,656 barrels per day of natural gas liquids and 3,163 bbl/d of condensate and light oil.

Under the deal, Pieridae also acquired three sour gas processing plants with a combined capacity of approximately 750 MMcf/d; a 14% interest in the Shantz Sulphur forming plant; and about 1,700 kilometers of pipelines.

The acquisition will supply the first train at Pieridae's proposed Goldboro LNG facility in Nova Scotia for at least 20 years, Pieridae CEO Alfred Sorensen said in the release.

Pieridae is expected to leverage US$4.5 billion from government-backed guarantees for conventional gas supply development and for the construction of the Goldboro LNG facility.

Pieridae funded the acquisition by issuing term debt and equity. The first tranche of its brokered private placement of subscription receipts closed Oct. 11 for gross proceeds of C$12.8 million along with a non-brokered private placement of subscription receipts for gross proceeds of C$600,000. The subscription receipts will be exchanged on a one-to-one basis for common shares of Pieridae.

The second tranche closed at the time of the sale, as Pieridae issued 23,255,813 common shares to Third Eye Capital Corp. portfolio company Erikson National Energy Inc. at a price of 86 Canadian cents per common share for gross proceeds of C$20 million.

Pieridae also signed a credit agreement with Third Eye Capital for a senior secured non-revolving term loan facility of C$206 million.

Haywood Securities Inc. acted as financial adviser to Pieridae for the acquisition.