Tidewater Midstream and Infrastructure announced that it has entered into an agreement to acquire from Pipestone Energy.
Image: The total cash consideration of $30m is payable under the acquisition agreement. Photo: Courtesy of Adam Radosavljevic from Pixabay.
Pipestone is a 100% working interest in a strategic 30 MMcf/d raw gas compression, 5,400 bbls/d condensate handling and associated water disposal battery for total consideration of up to $30m in cash; plans to invest $25m in additional liquids handling infrastructure at its Pipestone Gas Plant and extended a take or pay agreement with Pipestone Energy.
Tidewater is also pleased to announce that it has entered into a $75m bought deal offering of convertible debentures with a syndicate of underwriters.
Tidewater is pleased to announce that it has entered into an agreement with Pipestone Energy to acquire a 100% working interest in the Pipestone East Battery which will be located approximately 24km directly east of Pipestone Plant 1 and will be a physical extension of existing Tidewater infrastructure that services Pipestone Energy.
The total cash consideration payable under the Acquisition Agreement is up to $30 million consisting of an initial cash payment by Tidewater of approximately $14 million to purchase existing compression, power generation, water handling infrastructure and facility equipment, with a commitment to fund up to $16 million to finalize the design, construction and commissioning of the Pipestone East Battery, which is expected to be completed over the next 12 to 18 months.
Concurrently upon signing the Acquisition Agreement, Pipestone Energy has elected to not exercise its option to acquire a 20% working interest in the Pipestone Plant 1 and has entered into certain other commitment agreements with Tidewater for Tidewater’s current and future projects in the Pipestone area, including: a 10-year take-or-pay agreement for compression, separation and liquids handling at the Pipestone East Battery; an extension of Pipestone Energy’s current 30MMcf/day take-or-pay commitment at the Pipestone Plant 1 from a 5-year term to a 10-year term; a 10-year, 20 MMcf/d take-or-pay commitment for Tidewater’s proposed Pipestone Plant 2 project (defined below), subject to the project receiving final investment decision by Tidewater on or before year-end 2019 and the proposed Pipestone Plant 2 being commissioned by Tidewater on or before the end of the second quarter of 2022; and a 10-year dedication of an existing Pipestone Energy facility to Tidewater’s liquids handling expansion project.
Once the Pipestone East Battery is complete, it is expected to improve the strategic position that Tidewater has in the Pipestone area, provide additional EBITDA to Tidewater of approximately $4 million per year and further increase the average contract life of Tidewater’s infrastructure assets in the greater Pipestone area.
Source: Company Press Release.