Pembina Pipeline Corp. is buying Kinder Morgan Canada and the Cochin Pipeline for $4.35 billion, it was announced on Wednesday.
Pembina said the transaction values Kinder Morgan Canada at approximately $2.3 billion, or $15.02 per share, and Cochin U.S. at approximately $2.05 billion.
Pembina will acquire assets including the Cochin Pipeline system, the Edmonton storage and terminal business and Vancouver Wharves, a bulk storage and export/import business.
Pembina said the Cochin mainline represents a fully contracted cross-border pipeline system that is highly strategic as it connects Pembina’s Channahon, Bakken and Edmonton area assets and is connected to markets in Mont Belvieu, Conway and Edmonton. There is future potential to connect the eastern leg of the Cochin Pipeline system to Pembina’s assets and markets in Sarnia, Ont.
“As well, the corporate acquisition includes a significant crude oil storage and terminalling business in Western Canada’s key energy complex, which connects Pembina’s conventional and oil sands pipelines to all major export pipelines, providing increased flexibility and greater egress options to customers,” said the company.
“Finally, there is potential for further integration of Vancouver Wharves assets into the Pembina value chain.”
Mick Dilger, Pembina’s president and chief executive officer, said the acquisition is highly strategic for Pembina, providing enhanced integration with its existing franchise, entrance into new businesses and clear visibility to creating long-term value for shareholders.
“It represents an ideal opportunity to continue building on our low-risk, long-term, fee-for-service business model while extending our reach into the U.S. through a highly desirable cross-border pipeline. Further, it will enhance our diversification as well as Pembina’s customer service offering as a leading provider of integrated services to hydrocarbon producers in Western Canada,” said Dilger.
The company said Cochin is one of two significant cross-border condensate import pipelines. Cochin, which spans 2,900 km from Chicago, Ill., to Fort Saskatchewan has a design capacity of up to 110,000 barrels per day. Cochin complements Pembina’s existing condensate infrastructure in Western Canada and extends the company’s reach into the U.S., with the potential to provide Pembina and its customers improved market access and tremendous long-term optionality, it said.
Mario Toneguzzi is a Troy Media business reporter based in Calgary.