Pembina Closes Acquisition of Enbridge's Canada-US Midstream Assets

Pembina Pipeline Corporation has completed its acquisition of Enbridge Inc.’s interest in the Alliance, Aux Sable, and NRGreen joint ventures for an aggregate purchase price of approximately $2.3 billion (CAD 3.1 billion).

Pembina owned 50 percent of the equity interests in Alliance, Aux Sable’s Canadian operations and NRGreen and approximately 42.7 percent of the equity interests in Aux Sable’s U.S. operations. Pembina now holds 100 percent of the equity interests in Alliance, Aux Sable’s Canadian operations and NRGreen, and approximately 85.4 percent of Aux Sable’s U.S. operations. Pembina will become the operator of all of the Alliance, Aux Sable and NRGreen businesses.

"We are excited to further enhance our business by increasing our ownership in Alliance and Aux Sable,” Pembina President and CEO Scott Burrows said in a statement Monday. “Aligning with Pembina’s strategy, this acquisition grows and strengthens our existing franchise and provides greater exposure to resilient end-use markets”.

"With completion of the transaction, we will prioritize integrating these businesses and pursuing the near-term synergies we have identified to extract greater value from these unique and exceptional assets,” Burrows noted.

Alliance delivers liquids-rich natural gas sourced in Northeast British Columbia, Northwest Alberta, and the Bakken region to Chicago. Aux Sable operates natural gas liquids (NGL) extraction and fractionation facilities in both Canada and the USA, with extraction rights on Alliance, offering connectivity to key U.S. NGL hubs, Enbridge said in an earlier news release.

The purchase price was funded, in part, from the net proceeds of Pembina's bought deal offering of subscription receipts of $0.94 billion (CAD 1.28 billion), which closed on December 19, 2023.

On March 28, Pembina said it made a cash payment per subscription receipt to holders of the receipts of record as of March 15, of $0.49 (CAD 0.6675). No further dividend equivalent payment will be paid or is payable to holders of the subscription receipts in connection with closing of the transaction, the company added.

In conjunction with closing, Pembina has updated its 2024 adjusted EBITDA guidance range to $2.99 billion to $3.17 billion (CAD 4.05 billion to 4.30 billion), from the previous range of $2.75 billion to $2.97 billion (CAD 3.725 to 4.025 billion). Relative to its previous guidance, the company said its revised outlook for 2024 primarily reflects the incremental contribution from increased ownership of Alliance and Aux Sable, as well as a stronger outlook in the marketing business.

In a separate news release, Enbridge said, “This is an important milestone and Enbridge remains committed to working closely with Pembina to ensure the safe and reliable operation of the assets during the transition period”.

Enbridge added that the divestiture represents a key element of its financing plan. The sale proceeds will fund a portion of the company's strategic U.S. gas utilities acquisitions as well as reduce debt.  

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