Husky Energy will sell 65% ownership interest in select midstream assets in the Lloydminster region of Alberta and Saskatchewan to Cheung Kong Infrastructure Holdings and Power Assets Holdings Limited (PAH). Husky, which will remain the operator, will receive $1.7 billion of gross cash proceeds, while retaining 35% of the midstream assets.
“We set a high bar for this transaction,” said Husky CEO Asim Ghosh. “It was important to realize full value for these assets and to maintain operatorship and preserve the tight integration between our heavy oil production, marketing and refining assets. We sought partners who shared these objectives and who viewed these as top tier assets that provide considerable growth potential.”
The partners plan to expand Husky’s heavy oil business and have the funding capacity to build the midstream infrastructure requirements associated with the planned construction of additional Lloyd thermal projects in Saskatchewan and Alberta, Husky said in a written statement.
“This transaction unlocks significant value and supports our objective of strengthening the balance sheet,” said Ghosh.
The assets involved in this transaction include about 1,900 km of pipeline in the Lloydminster region, 4.1 MMbbls of oil storage capacity at Hardisty and Lloydminster, and other ancillary assets. A new limited partnership will be formed in which PAH owns 48.75% of the company, Husky owns 35% and Cheung Kong Infrastructure owns 16.25%.