Business Media Network
TransCanada Pipeline said Thursday it has reached agreements to sell another $1.15 billion of its assets in Western Canada.
TransCanada stunned the investment community in December of last year when it cut down its dividend and announced a massive restructuring that includes selling off about $3 billion of its non-core assets.
The Calgary-based energy company said it will focus on natural gas transmission, power generation and marketing in Canada and the northern U.S. and will sell all assets not related to those businesses.
Thursday's announcement puts TransCanada almost at its target, the company said in a release.
"The proceeds from these sales are in line with our expectations and mark another significant milestone in TransCanada's divestiture program,'' said Doug Baldwin, TransCanada's president and CEO. "These sales, combined with other previously-announced sales and agreements, bring TransCanada 80% of the way to its $3 billion target from the divestiture of non-core assets.''
Several companies have agreed to buy TransCanada's remaining natural gas liquids and extraction, and natural gas gathering and processing midstream assets in Western Canada for a total of about $1.15 billion.
"As we continue to finalize the sale of non-core assets, our debt load will be reduced, our financing costs will decrease and we expect efficiencies in corporate costs, which will contribute to improved earnings and cash flow,'' Baldwin said.
The energy company also announced Thursday it will sell its interests in the Cochrane, Redwater, Empress II, Empress V, and Younger natural gas liquids and extraction facilities, as well as its West Stoddart natural gas processing plant, to Williams Energy Canada Inc., a subsidiary of The Williams Companies, Inc., for an undisclosed amount.
"Williams is positioned to become the first company that has the ability to provide its producer customers with a comprehensive transportation, storage and distribution network to every major natural gas liquids demand centre in North America. This is consistent with our midstream vision and growth strategy," Steve Malcolm, president and CEO of William's, said of the deal. "Our midstream business has traditionally been focused in three areas of the United States this acquisition expands our scope into a fourth area-Western Canada."
TransCanada owns 100% of the Cochrane, Redwater, Empress II and West Stoddart facilities, 50% of the Empress V facility, and 43.3% of the Younger facility.
The sale is expected to close in the fourth quarter of this year, pending regulatory and government approvals.
On July 4, TransCanada closed the sale of its 30% interest in the East Crossfield gas plant and associated petroleum and natural gas rights to Mobil Oil Canada Limited.
On July 13, TransCanada sold its respective 70%, 65% and five per cent interests in the Mosquito Creek, Parkland and Vulcan natural gas processing plants to AltaGas Services Inc.
TransCanada has also entered into agreements with other purchasers to sell its:
*100% interest in the Zama area sour gas processing plants and associated gathering system;
*100% interest in the Central Foothills natural gas gathering system;
*100% interest in the Columbia-Minehead natural gas gathering system;
*About 98% interest in the Cutbank sweet gas processing plant and associated gathering system; and
*Its 52% interest in the Clear Hills sour gas processing plant and associated gathering system.
These sales are expected to close by late this September, pending regulatory approvals.
Some of the assets remaining to be sold include the rest of the company's midstream facilities, Cancarb Limited (thermal carbon black manufacturing business), and the Express System. Other assets for divestiture include TransCanada's international interests in:
*An offshore natural gas pipeline system, a gas treatment plant and offshore gas producing licenses in the Netherlands;
*TransGas natural gas pipeline in Colombia;
*Accroven SRL natural gas liquids extraction facility in Venezuela;
*GasPacifico natural gas pipeline from Argentina to Chile; and
* Its Energia Mayakan natural gas pipeline in Mexico.
