Pembina, KKR to merge gas infrastructure in C$11.4bn deal

Pembina Pipeline Corp, a Calgary-based energy transportation and midstream services provider, has formed a joint venture with KKR to combine their Western Canadian natural gas processing assets. The new business, which will be managed by Pembina, will be 60 percent owned by the company and 40 percent owned by KKR’s infrastructure funds. The deal, expected to close in the second or third quarter of 2022, has a total value of C$11.4 billion.

PRESS RELEASE

CALGARY, AB, March 1, 2022 /CNW/ – Pembina Pipeline Corporation (“Pembina” or the “Company”) (TSX: PPL) (NYSE: PBA) today announced that it has entered into definitive agreements with KKR to combine their respective western Canadian natural gas processing assets into a single, new joint venture entity (“Newco”), which will be owned 60 percent by Pembina and 40 percent by KKR’s global infrastructure funds.

Pembina will serve as the operator and manager of Newco. Included in the transaction are Pembina’s field-based natural gas processing assets, the Veresen Midstream business (currently owned 55 percent by funds managed by KKR and 45 percent by Pembina), and the business currently carried on by Energy Transfer Canada (“ETC”) (currently owned 49 percent by funds managed by KKR). Concurrently with closing of the joint venture transaction, Newco will also acquire Energy Transfer LP’s remaining 51 percent interest in ETC. Collectively, the ascribed value of these transactions totals $11.4 billion, excluding the value of assets under construction.

Highlights
Brings together three complementary platforms to create a premier, highly competitive western Canadian gas processing entity with the ability to serve customers throughout the Montney and Duvernay trends from north central Alberta to northeast British Columbia (“NEBC”).

Approximately $700 million of cash proceeds to Pembina expected upon closing, with approximately $550 million expected to be deployed for debt repayment and approximately $150 million for additional common share repurchases.

Efficiencies from the combination of three platforms, enabling cost reductions and an enhanced customer service offering.

Increases Pembina’s ownership in Veresen Midstream and exposure to increasing LNG-driven volume growth in NEBC in a capital efficient manner.

Mid to high single digit accretion to Pembina’s adjusted cash flow from operating activities per share1 over the next five years.
Upon closing, Pembina intends to increase its common share dividend by $0.0075 per share per month, or 3.6 percent.

Area of mutual interest for natural gas processing in western Canada provides strong structural alignment for joint venture partners.

Well-capitalized entity able to pursue future opportunities in a capital efficient manner.