Keyera Facilities Income Fund (“Keyera”) (TSX:KEY.UN;KEY.DB;KEY.DB.A) announced today that it is significantly expanding its gas processing capability in west central Alberta. Keyera will invest approximately $65 million to acquire ownership interests in two additional gas plants and increase its ownership interests in four of its existing gas plants. Upon completion of these transactions, Keyera will have ownership interests in 17 gas plants and will increase its net gas processing capacity by 9%, or 151 million cubic feet per day. All of the incremental capacity is able to extract NGLs and handle sour gas. Portions of the acquisitions are subject to rights of first refusal. All of the acquisitions are expected to close by July 15, 2010, subject to normal closing conditions.
Under the terms of the agreements, Keyera will acquire a 57% ownership interest in the Minnehik Buck Lake gas plant and a 20% ownership interest in the Edson gas plant. In addition, it is acquiring various ownership interests in the Keyera-operated West Pembina, Nordegg River, Gilby and Brazeau River gas plants. Included in the transactions are interests in approximately 260 kilometres of gathering pipelines and nine compressor stations. Also, as part of the transactions Keyera will acquire approximately 12 billion cubic feet of proved plus probable natural gas reserves and approximately 711 thousand barrels of natural gas liquids
reserves. Current production is approximately 4 million cubic feet per day of natural gas and about 350 barrels per day of natural gas liquids.
All of the acquisitions are located in the heart of Keyera’s operations in west central Alberta.
The Minnehik Buck Lake plant is located between Keyera’s Rimbey and Bigoray gas plants, in an area with significant geological prospectivity. The plant’s extensive gathering infrastructure and ability to process sour gas and extract natural gas liquids will enhance Keyera’s processing options for producers. As the largest owner in the Minnehik Buck Lake plant, Keyera will be submitting a proposal to the plant’s operating committee to become operator of the plant. The Edson gas plant extends Keyera’s reach northwest in the foothills region, into an area that has relatively under developed lands and attractive geology, characteristics similar to those that make the location of Keyera’s existing foothills facilities attractive.
“These transactions are a continuation of our growth strategy in the Gathering and Processing segment of our business” said Jim Bertram, President and CEO of Keyera. “The new plants meet all of our evaluation criteria. They are in areas where the geology is prospective and have the potential to continue to benefit from horizontal drilling and multi-stage fractionation techniques. As well, because these plants are connected to significant gathering pipeline infrastructure and are capable of extracting NGLs, they are a good fit with our Liquids Business Unit operations and overall integrated business strategy. We are also pleased to acquire additional interests in four of our existing plants, as this simplifies administration and gives us better opportunities to maximize the benefits of our business development initiatives.”
Assets Acquired in the Transactions
Minnehik Buck Lake Gas Plant
· A 57% interest in the Minnehik Buck Lake gas plant. The plant has a license capacity of 100 million cubic feet per day and is able to process sweet and sour gas, and extract natural gas liquids. Current throughput is approximately 50 million cubic feet per day.
· An approximate 60% interest in the plant inlet compressor, nine compressor stations, and approximately 260 kilometres of sweet and sour gathering pipelines.
· A 57% ownership interest in the Minnehik Buck Lake Gas Unit #1 and a 100% ownership interest in certain non-unit wells, which deliver production to the plant for processing. Edson Gas Plant
· A 20% ownership interest in the Edson gas plant. The Edson gas plant is operated by Talisman Energy Inc. It has a license capacity of 375 million cubic feet per day and is able to process sweet and sour gas, and extract natural gas liquids. Current throughput is approximately 215 million cubic feet per day.
West Pembina Gas Plant
· An additional 7% ownership interest in the Keyera West Pembina gas plant, bringing Keyera’s ownership to 76%.
· An approximate 20% ownership interest in a field compressor and an additional 8% ownership interest in the Keyera West Pembina sulphur blocking facility.
· A 100% interest in approximately 125,000 tonnes of sulphur inventory, located at the West Pembina plant.
· A 29% ownership interest in the Nisku S Pool and an 11% ownership interest in the Nisku W Pool, which deliver production to the West Pembina gas plant for processing.
Nordegg River Gas Plant
· An additional 7% ownership interest in the Keyera Nordegg River gas plant, bringing Keyera’s ownership to 89%.
· An additional 11% ownership interest in the Nordegg River gas plant inlet compression, bringing Keyera’s ownership to 83%.
Gilby Gas Plant
· An additional 1.7% ownership interest in various components of the Keyera Gilby gas plant, bringing Keyera’s ownership to 79%.
Brazeau River Gas Plant
· An additional 1% ownership interest in the Keyera Brazeau River gas plant, bringing
Keyera’s ownership to 92%.