Enbridge Inc (TSE:ENB) sells Saskatchewan pipelines for $1 billion

Pipeline company Enbridge Inc (TSE:ENB, Mkt cap 51.74B, P/E 27.07, Div/yield 0.53/3.85, EPS 2.03, Shares 938.63M) announced last week the sale of liquids pipelines and related facilities in southeast Saskatchewan and southwest Manitoba, known as the South Prairie Region assets, to Tundra Energy Marketing Ltd for $1.075bn in cash.

The assets acquired by Tundra include the Saskatchewan Gathering and Weyburn gathering systems as well as the Westspur trunk line. The deal does not include Enbridge’s Bakken Expansion Pipeline, which enables delivery of crude oil production in North Dakota to the Enbridge Mainline System at Cromer, Manitoba.

Enbridge plans to re-invest the proceeds from the sale into organic growth projects, including the Wood Buffalo Extension, Athabasca Twin and Norlite projects.

“The sale of the assets at an attractive valuation provides an efficient source of financing for the Enbridge group, supporting its industry leading secured growth program and displacing equity that we would otherwise need to raise through issuance of new capital,” commented Enbridge executive vice president and chief financial officer John Whelen. “It also represents about one-half of the target we set in September, in conjunction with the announcement of our planned acquisition of Spectra Energy, to monetize approximately $2bn of non-core assets to strengthen the balance sheet and provide additional financing flexibility.”

Saskatchewan Energy and Resources Minister Dustin Duncan told Pipeline News in October that he had no concerns about the Enbridge-Tundra transaction.

“Our understanding is it really has no impact on companies that are feeding into the distribution line at this point, and no real impact on employment,” he said. “I think, overall, it’s a positive for the province to see a company like Tundra furthering their investment in Saskatchewan.”

Shipper commercial arrangements and contracts related to the South Prairie Region assets are expected to remain in place, and crude oil and NGL volumes delivered from the assets are expected to continue to flow onto the Enbridge Mainline at Cromer, Enbridge reported.

Enbridge Inc (TSE:ENB) is a Calgary-based energy transportation and distribution company. The Company operates in five segments: Liquids Pipelines; Gas Distribution; Gas Pipelines, Processing and Energy Services; Sponsored Investments, and Corporate. Liquids Pipelines segment owns and operates crude oil and other liquid hydrocarbons pipelines and terminals. Gas Distribution consists of the Company’s natural gas utility operations. Gas Pipelines, Processing and Energy Services segment consists of investments in natural gas pipelines, gathering and processing facilities and the Company’s energy services businesses, along with renewable energy and transmission facilities. Sponsored Investments includes the Company’s 33.7% economic interest in Enbridge Energy Partners, L.P. (EEP), and Enbridge’s interests in both the Eastern Access and Lakehead System Mainline expansion projects held through Enbridge Energy, Limited Partnership (EELP). The Corporate segment includes an investment in Noverco Inc. More from Reuters »

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