Pembina Pipeline enhances capacity with C$420m acquisition of Whitecap’s Kaybob Complex

Pembina Pipeline Corporation (TSX: PPL; NYSE: PBA), through its affiliate Pembina Gas Infrastructure Inc. (PGI), which it co-owns with KKR, has struck a significant deal with Whitecap Resources Inc. (Whitecap) involving a C$420 million transaction ($252 million net to Pembina). This major deal includes the acquisition of a 50% working interest in Whitecap’s 15-07 Kaybob Complex (the “Kaybob Complex”) and supports future infrastructure development for Whitecap’s Lator growth area.

The transaction will see PGI acquiring substantial assets within the Kaybob Complex, which boasts natural gas processing capabilities of 165 million cubic feet per day and condensate stabilization capacity of 15,000 barrels per day. Whitecap will retain operatorship of these assets. This move is complemented by a long-term take-or-pay agreement secured by Whitecap, guaranteeing PGI’s capacity in the Kaybob Complex and a commitment to an area of dedication for all volumes Whitecap produces from the area.

Further deepening the partnership, PGI will also fund the development of Whitecap’s Lator area, including constructing a new battery and gathering lateral—the Lator Infrastructure—which PGI will own upon completion. Whitecap, in return, has agreed to long-term take-or-pay contracts ensuring priority access to this infrastructure. Additionally, the deal extends to include Whitecap’s commitments at the Musreau gas plant within the Cutbank Complex and the K3 gas plant.

Pembina Pipeline Enhances Capacity with Strategic C$420 Million Acquisition of Whitecap’s Kaybob Complex

Chris Rousch, President & CEO of PGI, emphasized the strategic nature of these agreements: “Our ability to provide unique and value-added solutions to support Whitecap’s development in both the Montney and Duvernay demonstrates our leading advantage and is why our customers choose us.”

This partnership aligns PGI and Pembina with a robust growth trajectory, as Whitecap is recognized for its strong performance in the Western Canadian Montney and Duvernay regions. The transaction is expected to boost asset utilization and volume capture at PGI’s facilities, with Whitecap’s long-term contracts providing strong contractual protections and stability.

The broader Pembina value chain will also benefit significantly from this transaction. It includes new and extended long-term agreements for transportation, fractionation, and marketing services, alongside a dedication of future growth volumes from Whitecap’s developments. This will enhance utilization across Pembina’s integrated services, including the under-construction Redwater Complex and supports Pembina’s ethane supply commitments.

The transaction is being financed through PGI’s existing credit facilities, with closure anticipated in the third quarter of 2024, subject to customary closing conditions and regulatory approvals.