Canadian oil sands producer MEG Energy Corp. said Feb. 8 it has agreed to sell some pipeline and storage assets in Alberta to Wolf Midstream Inc. for CA$1.61 billion (US$1.28 billion) to pay down debt and fund its flagship project in Athabasca.
MEG said it would sell its 50% interest in the Access Pipeline for CA$1.4 billion (US$1.1 billion) and its full interest in the 900,000-barrel Stonefell oil storage facility for CA$210 million (US$167 million).
MEG said it will get CA$1.52 billion (US$1.2 billion) in cash when the deal closes, and a credit of CA$90 million (US$71 million) toward future expansions of the Access Pipeline.
The company said it plans to use the deal proceeds to repay about CA$1.23 billion (US$980 million) in senior secured term loans and the rest to fund the expansion of its Christina Lake project in Athabasca.
The bitumen miner also intends to raise its 2018 capital budget to $700 million from $510 million to fund the expansion.
BMO Capital Markets (NASDAQ: BMLP) and Credit Suisse (NYSE: CS) are MEG’s financial advisers, while Burnet, Duckworth and Palmer LLP and Latham & Watkins LLP gave legal advice.
MEG also reported a 48% jump in fourth-quarter revenue, benefiting from higher volumes sold at the U.S. Gulf Coast.
MEG managed to cut its costs per barrel by nearly half in the quarter. That helped its adjusted profit of 15 Canadian cents per share blow past the expectations of analysts, who estimated the company would break even.
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