Inter Pipeline Ltd. is set to acquire the remaining 15% stake in the Cold Lake pipeline system from Canadian Natural Resources Ltd. in a C$527.5 million deal set to close by the end of 2016.
Canadian Natural will receive C$350 million in cash from proceeds from a new term debt offering expected to reach completion before the close of the acquisition, according to a Dec. 12 news release. The remaining C$177.5 million will be funded partly through the issuance of 6,417,740 Inter Pipeline units to Canadian Natural at C$27.66 per share.
Upon the deal's close, Inter Pipeline would own all of the pipeline system and would enter into a binding, long-term, take-or-pay agreement with Canadian Natural to transport diluent and bitumen blend for its Kirby North SAGD oil sands project. It will also construct a C$125 million pipeline connection to the Kirby North production facility, which is expected to come into service in the first three months of 2020.
The 1,400-kilometer Cold Lake pipeline system is the largest transporter of bitumen production from the Cold Lake area of Alberta. Through the through the FCCL Partnership, the system provides long-term pipeline transportation service to a variety of large oil producers such as ConocoPhillips.