Enbridge to sell key pipeline and power assets to Pembina Pipeline for $2.3bn

In a significant development in the energy sector, Enbridge has agreed to sell its stakes in the Alliance Pipeline, Aux Sable, and NRGreen Power businesses to Pembina Pipeline Corporation for a total of C$3.1 billion ($2.3 billion). The deal includes the assumption of Alliance Pipeline’s non-recourse debt, approximately C$327 million ($243 million).

Strategic Shift: Enbridge Focuses on Capital Recycling and Portfolio Optimization

Enbridge’s 50% stake in Alliance Pipeline and 42.7% stake in Aux Sable are part of this strategic divestiture. Alliance Pipeline is a major player in the natural gas market, boasting a 3,848km long system that spans across Canada and the US. Aux Sable, meanwhile, operates natural gas liquids (NGLs) extraction and fractionation facilities in both countries, integral to the North American energy infrastructure.

NRGreen Power, with Enbridge owning a 50% interest, operates five waste heat recovery facilities in Canada. The sale represents Enbridge’s continued focus on optimizing its portfolio and reducing commodity price exposure, as stated by EVP and CFO Pat Murray.

Pembina Pipeline to Bolster Its Operations with Full Ownership

This transaction allows Pembina Pipeline to fully acquire Alliance Pipeline, Aux Sable’s Canadian operations, and NRGreen. It significantly increases Pembina’s stake in Aux Sable’s US operations to about 85.4%, positioning it as a dominant operator in these sectors. The remaining 14.6% stake in Aux Sable’s US unit is held by Williams.

Pembina’s president and CEO Scott Burrows views this as a strategic move to consolidate interests in these assets at an attractive valuation, promising cash flow accretion and synergy potential.

Anticipated Closing and Advisory Roles

The transaction is expected to close in the first half of 2024, subject to standard closing conditions and regulatory approvals. National Bank Financial and Scotiabank served as financial advisors to Enbridge, with Torys providing legal advice. For Pembina Pipeline, TD Securities and Blake, Cassels & Graydon are providing financial and legal counsel, respectively.