Canadian oil-and-gas producer Husky Energy has signed an agreement to sell 65% interest in its midstream assets in the Lloydminster region of Alberta and Saskatchewan for C$1.7bn ($1.3bn).
As per the deal, Husky will sell stakes in the assets, including approximately 1,900km of pipeline in the Lloydminster region, 4.1 million barrels of oil storage capacity at Hardisty and Lloydminster, and other ancillary assets, to Cheung Kong Infrastructure and Power Assets Holdings (PAH).
Additionally, the three companies will form a new limited partnership. Husky will have 35% stake in the partnership, while Cheung Kong Infrastructure and PAH will own 16.25% and 48.75% stakes, respectively.
Husky Energy CEO Asim Ghosh said: "It was important to realize full value for these assets and to maintain operatorship and preserve the tight integration between our heavy oil production, marketing and refining assets.
"We sought partners who shared these objectives and who viewed these as top tier assets that provide considerable growth potential."
The deal is a part of Husky’s effort to strengthen its balance sheet.
Upon completion of the deal, which is subject to regulatory approval, Husky will remain as the operator of the assets.
PAH CEO Charles Tsai said "In line with our acquisition requirements, this deal provides us with an excellent opportunity to invest in a secure and profitable project that offers immediate cash flow.
"Currently, all of the pipelines are nearly fully utilised. New pipeline and gathering systems are to be built in the next few years to meet the increasing demand. The new capacity is expected to be contracted out to users on a medium and long term basis."
The transaction is planned to be completed by the third quarter of 2016.
Image: Husky’s midstream storage tank farm in Hardisty, Alberta, Canada. Photo: courtesy of Power Assets Holdings Limited.