Spectra Energy to sell natural gas system to Keyera for $129 million

CALGARY — Spectra Energy (NYSE:SE) is selling its interests in the Nevis and Brazeau River natural gas facilities for $129 million to Keyera Facilities Income Fund (TSX:KEY.UN).

Texas-based Spectra owns 100 per cent of the Nevis gas plant, 30 km west of Stettler, and 40 per cent of Keyera Brazeau River gas plant.

The Keyera income fund will also be acquiring extensive gathering pipeline systems and compression at both facilities.

Keyera said it has sufficient credit in place to fund the transaction, including a commitment for an additional $75 million short-term credit facility if required at closing.

The deal, announced Wednesday, is expected to close Dec. 1.

“These acquisitions fit very well with our long-term growth strategy of increasing our ownership interest at our existing facilities and expanding our operations where we see opportunities for synergies with existing Keyera infrastructure,“ said Jim Bertram, president and CEO of Calgary-based Keyera.

“The Brazeau River gas plant is a key facility for us in an area where we have a number of new growth initiatives underway. Higher ownership allows us to accelerate incremental business opportunities and the new gathering systems significantly expand our capture area.”

Spectra Energy said it does not expect to record a material gain or loss associated with the transaction, which is part of its strategy of divesting non-core assets.

“Part of our plan when we took the Spectra Energy Income Fund private was to rationalize non core assets held by the fund,’ said Spectra Energy Transmission West president Doug Bloom. “This sale represents the timely execution of that plan.

Based in Houston, Spectra Energy operates in the United States and Canada with nearly 29,000 kilometres of transmission pipeline, 265 billion cubic feet of storage, and other natural gas infrastructure.

Keyera’s gas processing plants and associated facilities are in the west central and foothills natural gas production areas of the Western Canadian Sedimentary Basin.

Its NGL and crude oil infrastructure includes pipelines, terminals and processing and storage facilities in Edmonton and Fort Saskatchewan, Alta.

Keyera markets propane, butane and condensate to customers in Canada and the United States.

The funds units traded Wednesday at $17.45, down 29 cents, in Toronto and Spectra’s shares traded at US$18.47, down 84 cents, on the New York Stock Exchange.