Enbridge Inc. is selling a Saskatchewan pipeline system for over $1 billion to help finance its huge deal to take over Houston-based Spectra Energy Corp.
The Calgary-based pipeline firm announced the sale on Thursday. Tundra Energy Marketing Ltd. will buy Enbridge’s 1,600+ km South East Saskatchewan pipeline system and related infrastructure in Saskatchewan and southwest Manitoba.
Enbridge Busy Making Deals
Enbridge announced its $37 billion-dollar purchase of Spectra Energy earlier this month. The deal, expected to close early next year, will make Enbridge North America’s largest energy infrastructure company. The transaction is expected to close in early 2017.
The company expects the Saskatchewan pipeline sale to improve its balance sheet in advance of the Spectra deal. Enbridge’s CFO John Whelen stated that “In conjunction with the proposed Spectra Energy merger, we announced our intention to divest of approximately $2 billion of non-core assets over the next year to further strengthen Enbridge Inc.’s consolidated balance sheet and provide for additional financing flexibility.” The Saskatchewan sale will provide about half the $2-billion divestment total.
Major Pipeline System Changing Hands
The purchaser, Tundra Energy, says the South East Saskatchewan pipeline carries about 175,000 BPD of crude oil and connects to Enbridge’s mainline in Manitoba and its Bakken expansion pipeline. With the addition of the Saskatchewan pipeline, Tundra will handle over 250,000 BPD of crude from Canadian prairies provinces and North Dakota.
Tundra expects all employees currently working on the pipeline to remain employed.
To learn more about the deal, read this article from the Globe and Mail.
Also visit Enbridge’s press release announcing the sale.