Black Swan Energy Announces Strategic Infrastructure, Transportation and  Marketing Arrangements

Source Press Release
Company AltaGas Ltd.Black Swan Energy Ltd. 
Tags Asset Deals, Deals, Renewable Energy, Power
Date September 26, 2018

Black Swan Energy Ltd. (“Black Swan”) is pleased to announce that it has entered into a definitive agreement with a subsidiary of  AltaGas Ltd. (together with its subsidiaries, “AltaGas”) whereby AltaGas will acquire 50% ownership in certain existing and future natural gas processing plants of Black Swan (the “Aitken Creek Processing Facilities”). In addition, upon completion of the acquisition, AltaGas and Black Swan will enter into a long term agreement for the use by Black Swan of the AltaGas processing capacity on a cost of service basis at the Aitken Creek Processing Facilities, as well as transportation and marketing agreements. Black Swan will continue to operate the Aitken Creek Processing Facilities.

The 50/50 infrastructure joint venture, combined with existing and new AltaGas owned and operated liquids handling infrastructure, will provide a value proposition that includes gas processing, liquids handling, field fractionation and propane export via the AltaGas Ridley Island Propane Export Terminal (“RIPET”). Propane delivered to RIPET will receive Far East Index (“FEI”) pricing and Black Swan retains the option to increase these committed volumes through further plant expansions. FEI pricescurrently offer a premium to North American propane markets. Black Swan will retain an option to continue to market its butane and condensate products independently. The combined effect of these agreements will facilitate development of Black Swan’s core area at Aitken while accessing premium liquids markets to increase netbacks.

The long term processing agreement for the Aitken Creek Processing Facilities will be underpinned by a reserve dedication and area of mutual interest encompassing approximately 30% of the Black Swan Montney lands, as well as a priority of fill arrangement for AltaGas capacity ownership in the facilities.

The transportation and marketing arrangements will provide Black Swan long term liquids handling through the AltaGas North Pine field fractionation facility (“North Pine”), as well as corresponding propane marketing arrangements. The initial term of the commercial arrangements is 15 years (which are subject to customary renewal rights) while also providing an option to expand the various commercial arrangements through additional natural gas processing investments.

The transaction is anticipated to close in early October 2018, subject to satisfaction of customary closing conditions.

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