Pieridae Energy Ltd. says it has signed a purchase and sale agreement with Shell Canada Energy to buy all of Shell’s midstream and upstream assets in the Southern Alberta foothills for $190 million.
“This acquisition will be immediately accretive to the company and also allows us to enhance the sustainability of our existing asset base,” said Pieridae’s chief executive officer Alfred Sorensen in a news release.
“It also demonstrates solid progress for our flagship Goldboro LNG project. We said we would acquire additional gas supplies for the LNG facility and we have done that. Not only does this deal help us secure the remaining conventional natural gas supply needed for the first train of the Goldboro LNG project, it makes Pieridae a major player in the Alberta midstream and upstream industry. But more than that, it creates a solid, ongoing foundation for the company as we continue to build toward becoming the first Canadian company to market LNG off the East Coast to global consumers.”
The Goldboro project is in Nova Scotia.
The company said closing of the transaction is subject to satisfactory completion of due diligence by Pieridae on the assets. The closing is expected to occur in the third quarter of 2019, said the company.
“The conventional natural gas assets Pieridae controls are expected to allow the company to access up to US$1.5 billion in credit support from the German government under the UFK program to develop these upstream assets as part of the Goldboro LNG project,” it said.
“The assets currently produce approximately 28,623 barrels of oil equivalent per day (boe/d) (based on Q1 2019 average) consisting of approximately 118.9 million cubic feet per day (MMcf/d) of natural gas, 5,646 barrels per day (“bbl/d”) of natural gas liquids (“NGLs”) and 3,161 bbl/d of condensate and light oil. Pieridae will also acquire three deep cut, sour gas processing plants (Jumping Pound, Caroline and Waterton) in the acquisition, with a combined capacity of approximately 750 MMcf/d (currently operating with 420 MMcf/d of spare capacity), a 14 per cent working interest in the Shantz sulphur forming plant, and approximately 1,700 kilometres of pipelines.”
It said the net annual operating income of the assets is about $60 million.