Paramount is expected to obtain cash consideration of approximately £201m for the 6-18 Facility and approximately £60m for the reimbursement of the D2 project capital expenditures

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Image: The transaction is expected to be completed in July 2019. Photo: Courtesy of rawpixel from Pixabay.

Canada-based petroleum company Paramount Resources announced that it has signed agreement with an affiliate of CSV Midstream Solutions to sell its Karr 6-18 natural gas facility and related midstream assets.

The agreement has been signed for a total cash consideration of approximately £260m for 6-18 Facility, along with an additional £110m capital commitment to fund and complete the associated expansion of the facility (D2).

Under the transaction agreement, CSV Midstream is expected to undertake operatorship of the Karr 6-18 facility upon closing of the transaction and complete the construction of D2, which is currently in-progress and scheduled to be commissioned in the second half of 2020.

Paramount is expected to obtain cash consideration of approximately £201m for the 6-18 Facility and approximately £60m for the reimbursement of the D2 project capital expenditures.

The 6-18 facility includes 100MMcf/d of sour raw natural gas compression and dehydration capacity and 15,000Bbl/d of raw hydrocarbon liquids handling capacity.

The D2 facility is expected to be completed in 2020. Once completed, the 6-18 facility is expected to have total raw gas handling capacity of 150MMcf/d, including 70MMcf/d of sour raw gas processing, and 30,000Bbl/d of raw hydrocarbon liquids handling capacity.

Paramount will sign midstream services agreement with CSV Midstream

Paramount will also sign a midstream services agreement with CSV Midstream, as part of the transaction.

The service agreement includes a fee-for-service arrangement, a reliability guarantee and a take-or-pay volume commitment that ends 20 years following the completion of D2.

Paramount, in a statement, said:  “The commitment has been structured to minimize unutilized demand charges as well as provide the Company with flexibility to further its Karr resource play development.”

The transaction is also expected to support Paramount’s continued development of  its large-scale Montney resource play at Karr.

The sale transaction is expected to be completed in July 2019, subject to regulatory and customary closing conditions.