Inter Pipeline will acquire Canadian Natural Resources 15% interest in the Cold Lake pipeline system for $527.5 million, subject to closing adjustments. As a result, Inter Pipeline will own 100% of the system. The transaction is expected to close before the end of the year.
Additionally, upon closing, Inter Pipeline will 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. The agreement will coincide with the construction of a new $125 million pipeline connection to the Kirby North production facility, with service targeted for the first quarter of 2020.
Canadian Natural will receive $350 million in cash and $177.5 million through the issuance of 6,417,740 Inter Pipeline common shares in consideration for its Cold Lake ownership interest.
“Inter Pipeline’s purchase of the remaining interest in the Cold Lake pipeline system is a highly logical and immediately accretive investment on a funds from operations basis,” said Christian Bayle, president and CEO of Inter Pipeline. “Furthermore, with the Kirby North connection, Inter Pipeline secures a material oil sands transportation contract during a challenging time for the energy industry.”