Cenovus Energy Inc. (NYSE: CVE) agreed to purchase Canexus Corp.’s crude-by-rail transloading facility, North American Terminal Operations, for $75 million, subject to adjustments. The acquisition is part of Cenovus’s strategy to create a portfolio of transportation options designed to maximize market access and capture global prices for its oil.
The terminal is located about 50 kilometers (31 miles) northeast of Edmonton in Bruderheim, Alberta. It has existing pipeline connections to the Cold Lake and Access crude oil pipeline systems as well as links to the Canadian Pacific and Canadian National rail lines. Currently, Cenovus transports production volumes from its Foster Creek steam-assisted gravity drainage operation to Bruderheim on the Cold Lake Pipeline.
The terminal can be expanded at a relatively low capital cost if market conditions make rail economics more attractive. There is also undeveloped land included in the transaction that provides significant potential for Cenovus to consider possible value-added projects.
Cenovus expects to hire a third-party service provider to manage the facility. The transaction is expected to close Aug. 31, 2015, subject to certain conditions.
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