Acquisition Bolsters AltaGas' Midstream Value Chain,
Strengthens Commercial Profile, Delivers Long-term LPG Supply, and
Provides Meaningful Long-term Growth
CALGARY,
AB, Dec. 22, 2023 /CNW/ - AltaGas Ltd.
("AltaGas" or the "Company") (TSX: ALA) has closed the
previously announced acquisition of the Pipestone Assets,
including: 1) the Pipestone Natural Gas Processing Plant Phase I
and Phase II expansion project (individually, "Pipestone Phase I"
and "Pipestone Phase II"); 2) the adjacent Dimsdale Natural Gas
Storage Facility; 3) the Pipestone
condensate truck-in/truck-out terminal; and 4) the associated
gathering pipeline systems (collectively, the "Pipestone Assets")
from Tidewater Midstream and Infrastructure Ltd. ("Tidewater").
Following the completion of key de-risking milestones, AltaGas has
also declared a positive final investment decision ("FID") on the
Pipestone Phase II expansion project.
PIPESTONE PHASE II FULLY CONTRACTED;
CONSTRUCTION TO BEGIN IN 2024
The Pipestone Phase II expansion project is now 100 percent
contracted under long-term take-or-pay agreements with a
combination of marquee independent and investment grade producers.
All Pipestone Phase II customers who are existing Pipestone Phase I
customers have also agreed to multi-year contract extensions,
further improving the long-term commercial profile of the Pipestone
Assets.
With inclusion of these new agreements, the Pipestone acquisition is strongly risk
accretive to AltaGas with the Company's take-or-pay and
fee-for-service Midstream EBITDA mix set to increase by an
estimated six percent with a commensurate decrease in commodity
exposed EBITDA, once Pipestone Phase II comes online. In aggregate,
more than 90 percent of the Pipestone Assets' normalized
EBITDA1 is expected to come from take-or-pay or
fee-for-service based contracts.
Given recent engineering and procurement de-risking steps taken,
AltaGas is excited to move forward with sanctioning Pipestone Phase
II. The expansion project will be constructed on a fixed price
turnkey basis for the majority of the capital costs and will
deliver critical gas processing and liquids handling capacity in
the Pipestone region, which is one
of the fastest growing liquids-rich natural gas developments in
Canada.
TRANSACTION STRENGTHENS ALTAGAS'
FOOTPRINT IN LIQUIDS-RICH ALBERTA
MONTNEY
The Pipestone Assets strengthen AltaGas' midstream value chain
through an expanded footprint in the Alberta Montney and provide
meaningful long-term Liquified Petroleum Gas ("LPG") supply for the
Company's global exports platform. The transaction is expected to
be five percent EPS accretive and 0.1x net debt to normalized
EBITDA1 accretive, once Pipestone II comes online.
_______________________________
|
1.
|
Non-GAAP measure;
see discussion in advisories of this news release and
reconciliation to U.S. GAAP financial measures in AltaGas'
management's discussion and analysis (MD&A) as at and for the
period ended September 30, 2023, which is available on SEDAR+ at
www.sedarplus.com.
|
"Closing this transaction and reaching a positive FID on
Pipestone Phase II significantly strengthens our position
in one of Canada's most
prolific resource plays" said Vern
Yu, AltaGas' President and CEO. "This acquisition is
consistent with our long-term strategy through adding long-life
infrastructure assets with highly contracted take-or-pay and
fee-for-service revenue. The transaction also diversifies our
customer base, brings meaningful long-term LPG supply to our global
exports platform, and provides long-term growth through the
Pipestone Phase II expansion and has the potential for additional
expansion phases."
AltaGas welcomes its new customers, employees, contractors, and
other stakeholders as part of this acquisition and looks forward to
working together. The Company is excited to continue to support the
robust growth in the Alberta Montney with key gas processing,
liquids handling, and gas storage assets, all with global LPG
connectivity that will facilitate the best outcomes for the
Canadian energy industry.
ABOUT ALTAGAS
AltaGas is a leading North American infrastructure company that
connects customers and markets to affordable and reliable sources
of energy. The Company operates a diversified, lower-risk,
high-growth Utilities and Midstream business that is focused on
delivering resilient and durable value for its stakeholders. The
company's mission is to improve quality of life by safely and
reliably connecting customers to affordable sources of energy for
today and tomorrow.
From wellhead to tidewater, AltaGas' Midstream business is
focused on providing its customers with safe and reliable service
and connectivity that facilitates the best outcomes for their
businesses. This includes global market access for North American
LPGs, which provides North American producers and aggregators with
the best netbacks for LPGs while delivering diversity of supply and
stronger energy security to its downstream customers in
Asia.
Throughout AltaGas' operations, the company is playing a vital
role within the larger energy ecosystem that keeps the global
economy moving forward and is powering the possible within our
society, and in a safe, reliable, and affordable manner.
For more information visit www.altagas.ca or reach out to one of
the following:
Jon Morrison
Senior
Vice President, Corporate Development and Investor Relations
Jon.Morrison@altagas.ca
Adam McKnight
Director,
Investor Relations
Adam.McKnight@altagas.ca
Other Investor Inquiries
1-877-691-7199
investor.relations@altagas.ca
Media Inquiries
1-403-206-2841
media.relations@altagas.ca
FORWARD-LOOKING INFORMATION
This news release
contains forward-looking information (forward-looking statements).
Words such as "may", "can", "would", "could", "should", "will",
"intend", "plan", "anticipate", "believe", "aim", "seek",
"propose", "contemplate", "estimate", "focus", "strive",
"forecast", "expect", "project", "target", "potential",
"objective", "continue", "outlook", "vision", "opportunity" and
similar expressions suggesting future events or future performance,
as they relate to the Corporation or any affiliate of the
Corporation, are intended to identify forward-looking statements.
Specifically, such forward-looking statements included in this
document include, but are not limited to, statements with respect
to the following: following: the expectation that the
Pipestone Assets will strengthen AltaGas' commercial profile and
midstream value chain, provide long-term LPG supply for global
exports and provide long-term growth for the Company; advancement
of AltaGas' global export strategy; expectations regarding the
Company's take-or-pay and fee-for-service Midstream EBITDA mix
increasing by an estimated six percent and a decrease in commodity
exposed EBITDA once Pipestone Phase II comes online; expectations
regarding the Pipestone Assets' normalized EBITDA and the
percentage of normalized EBITDA attributable to take-or-pay and
fee-for-service based contracts; AltaGas' intention to move forward
with sanctioning Pipestone Phase II; the expectation that the
Pipestone Phase II expansion project will be constructed on a fixed
price turnkey basis; the expectation that Pipestone Phase II will
deliver critical gas processing and liquids handling capacity; the
strategic rationale and anticipated benefits to the Company of the
transaction; expected accretive effect and the transaction
supporting AltaGas' long-term strategy; expected diversification of
AltaGas' customer base and long-term growth opportunities through
the Pipestone Phase II expansion and potential additional expansion
phases; expected de-risk of long-term global exports supply and
diversification of AltaGas customer base; and the Company's
intention to continue supporting growth in the Alberta Montney and
facilitating desirable outcomes for the Canadian energy
industry.
The forward-looking statements in this news release
involve known and unknown risks, uncertainties and other factors
that may cause actual results, events and achievements to differ
materially from those expressed or implied by such statements. Such
statements reflect AltaGas' current expectations, estimates, and
projections and are based on certain material factors and
assumptions that AltaGas has made in respect thereof at the time
the statement was made. Such assumptions include, among other
things: AltaGas' ability to successfully integrate the
purchased assets into its existing operations on the anticipated
timeline; commodity prices; production rates; anticipated
Pipestone handling capacity;
interest rates and foreign exchange rates including the
U.S./Canadian dollar exchange rate; royalty regimes and future
royalty rates; future capital expenditure levels and general and
administrative costs; future transportation costs; ability to
obtain equipment and services in a timely manner to carry out
development activities; current and future industry conditions;
construction costs related to Pipestone Phase II; effect of the
transaction on the business and operations of the Company;
effective tax rates; financing initiatives; the performance of the
businesses; future performance of the purchased assets; frac
spread; access to capital; timing and receipt of regulatory, stock
exchange and other required approvals; planned and unplanned
facility outages; weather; acquisition and divestiture activities;
operational expenses and returns on investments; future operating
costs; effect of the transaction on run-time efficiencies; the
implementation of additional processing capacity and liquids
handling infrastructure; potential future asset transactions;
expected processing and liquids handling growth and the effect on
global exports; the impact of Pipestone Phase II on operating
costs, run-time efficiencies and customer outcomes; and that
AltaGas will have sufficient cash flow, debt or equity sources or
other financial resources.
The forward-looking statements contained herein
involve known and unknown risks, uncertainties and other factors
that may cause actual results, events and achievements to differ
materially from those expressed or implied by such statements,
including, without limitation: risks related to integration of the
purchased assets into AltaGas' existing operations; costs to
develop and operate the purchased assets and Pipestone Phase II;
risks that AltaGas may not achieve the anticipated benefits
including the anticipated synergies from the transaction when
anticipated or at all; failure to obtain equipment and services in
a timely manner to carry out development activities; the Company's
valuation of current operating assets and Pipestone Phase II,
including certain metrics and construction costs are different than
anticipated; that AltaGas does not have sufficient cash flow, debt
or equity sources or other financial resources; risks related to
conflict in Eastern Europe; health
and safety risks; operating risks; natural gas supply risks; volume
throughput; service interruptions; risks related to the
transportation of petroleum products; market risk; inflation;
general economic conditions; risks related to cyber security,
information and control systems; climate-related risks;
environmental regulation risks; regulatory risks; risks related to
litigation; changes in law; Indigenous and treaty rights;
dependence on certain partners; political uncertainty and civil
unrest; decommissioning, abandonment and reclamation costs;
reputation risk; weather data; capital market and liquidity risks;
fluctuations in natural gas demand and prices; interest rates;
internal credit risk; foreign exchange risk; debt financing,
refinancing and debt service risk; counterparty and supplier risk;
risks related to technical systems and processes incidents; growth
strategy risk; construction and development risks; risks related to
underinsured and uninsured losses; impact of competition in
AltaGas' businesses; counterparty credit risk; composition risk;
changes in the market value of the common shares and other
securities of the Company; variability of dividends; potential
sales of additional common shares and the potential for dilution;
loss of key personnel; risk management costs and limitations; the
risk that AltaGas may have less liquidity upon closing of the
transaction than anticipated; risks related to pandemics, epidemics
or disease outbreaks; and the other factors discussed under the
heading "Risk Factors" in the Company's Annual Information Form for
the year ended December 31, 2022
(AIF) and set out in AltaGas' other continuous disclosure documents
available through SEDAR+ at www.sedarplus.ca, which documents are
not incorporated by reference herein.
Many factors could cause AltaGas' or any particular
business segment's actual results, performance or achievements to
vary from those described in this news release, including, without
limitation, those listed above and the assumptions upon which they
are based proving incorrect. These factors should not be construed
as exhaustive. Should one or more of these risks or uncertainties
materialize, or should assumptions underlying forward-looking
statements prove incorrect, actual results may vary materially from
those described in this news release as intended, planned,
anticipated, believed, sought, proposed, estimated, forecasted,
expected, projected or targeted and such forward-looking statements
included in this news release, should not be unduly relied upon.
The impact of any one assumption, risk, uncertainty, or other
factor on a particular forward-looking statement cannot be
determined with certainty because they are interdependent, and
AltaGas' future decisions and actions will depend on AltaGas
management's ("Management") assessment of all information at the
relevant time. Such statements speak only as of the date of this
news release. AltaGas does not intend, and does not assume any
obligation, to update these forward-looking statements except as
required by law. The forward-looking statements contained in this
news release are expressly qualified by these cautionary
statements.
Information contained in this news release about
prospective financial performance, financial position, or cash
flows may be considered a financial outlook under applicable
securities laws and is based on assumptions about future events and
financial metrics, including economic conditions and proposed
courses of action, royalty rates, operating costs, transportation
costs, debt levels, and capital expenditures based on Management's
assessment of the relevant information currently available. Readers
are cautioned that such financial outlook information contained in
this news release is subject to numerous assumptions, risk factors,
limitations and qualifications, including those set forth in the
above paragraphs. The actual results of operations and financial
results of the Company and the benefits to be achieved from the
transaction will vary from that set forth in this news release and
such variations may be material. This information has been provided
for illustration only and with respect to future periods are based
on budgets and forecasts that are speculative and are subject to a
variety of contingencies and may not be appropriate for other
purposes. Accordingly, these estimates are not to be relied upon as
indicative of future results. Except as required by applicable
securities laws, the Company undertakes no obligation to update
such financial outlook. The financial outlook contained in this
news release was made as of the date of this news release and was
provided for the purpose of providing further information about the
Company's potential future business and operations and the
anticipated benefits to be achieved from the transaction. Readers
are cautioned that the financial outlook contained in this news
release is not conclusive, is subject to change and should not be
used for purposes other than for which it is disclosed
herein.
Additional information relating to AltaGas, including its
quarterly and annual MD&A and consolidated financial
statements, AIF, and press releases are available through AltaGas'
website at www.altagas.ca or through SEDAR+ at
www.sedarplus.ca.
SPECIFIED FINANCIAL
MEASURES
Throughout this news release and in other documents disclosed
by the Corporation, AltaGas discloses certain measures to analyze
financial performance, financial position, and cash flow. These
non-GAAP and other financial measures do not have any standardized
meaning prescribed under International Financial Reporting
Standards ("IFRS") and therefore may not be comparable to similar
measures presented by other entities. These non-GAAP measures
provide additional information that management believes is
meaningful regarding operational performance, liquidity and
capacity to fund dividends, capital expenditures, and other
investing activities. The specified financial measures should not
be construed as alternatives or considered to be more meaningful
than GAAP measures which are determined in accordance with IFRS,
such as normalized EBITDA, net debt and net debt to normalized
EBITDA as indicators of AltaGas' performance.
Several of the non-GAAP measures and their reconciliations to
IFRS financial measures are shown in AltaGas' MD&A as at and
for the period ended September 30,
2023 which can be found on AltaGas' website at
www.altagas.ca or through SEDAR+ at
www.sedarplus.ca.
SOURCE AltaGas Ltd.