Pieridae To Purchase Shell Canada’s Foothills-Area Production And Assets

Pieridae Energy Limited has signed a purchase and sale agreement with Shell Canada Energy to acquire all of Shell’s midstream and upstream assets in the southern Alberta Foothills for C$190 million.

Shell Canada will take an equity stake in Pieridae.

 “[This deal] demonstrates solid progress for our flagship Goldboro LNG project,” said Alfred Sorensen, Pieridae’s chief executive officer.

“We said we would acquire additional gas supplies for the LNG facility and we have done that. Not only does this deal help us secure the remaining conventional natural gas supply needed for the first train of the Goldboro LNG project, it makes Pieridae a major player in the Alberta midstream and upstream industry.”

The conventional natural gas assets Pieridae controls are expected to allow the company to access up to US$1.5 billion in credit support from the German government under the UFK program to develop these upstream assets as part of the Goldboro LNG project.

The assets currently produce approximately 28,623 boe/d (based on the Q1 2019 average), consisting of approximately 118.9 mmcf/d of natural gas, 5,646 bbls/d of NGLs, and 3,161 bbls/d of condensate and light oil.

Pieridae will also acquire three deep cut, sour gas processing plants (Jumping Pound, Caroline and Waterton) in the acquisition, with a combined capacity of approximately 750 mmcf/d (currently operating with 420 mmcf/d of spare capacity), a 14 per cent working interest in the Shantz sulphur forming plant, and approximately 1,700 kilometres of pipelines.

The purchase price for the acquisition will be satisfied via (i) the payment to Shell of C$175 million in cash (net of adjustments), to be raised by Pieridae through the issuance of term debt and equity, and (ii) the issuance of Pieridae common shares to Shell having an aggregate value of C$15 million (such value to be determined proximate to the time of closing of the acquisition, in accordance with the terms of the purchase agreement).

Subject to completing due diligence, the acquisition is expected to close in the third quarter, pending satisfaction of customary closing conditions and receipt of regulatory approvals.

“I’m proud of the sour gas businesses we have built in Alberta and I want to thank all of the employees, contractors and local communities that have helped make these assets a cornerstone of our business in Canada for nearly 70 years,” said Michael Crothers, Shell Canada president and Country Chair. “We are pleased they are going to a buyer with a strong focus on safety, community and environmental stewardship, and one that is well placed to take these assets to the next stage of their development.”

Pieridae will retain all site-based Shell employees and some Calgary-based Shell employees who predominantly support the Foothills assets, Shell said.

Last October, Shell Canada Energy, an affiliate of Royal Dutch Shell plc, announced it has taken a final investment decision (FID) on LNG Canada, a LNG project in Kitimat, B.C., in which Shell has a 40 per cent working interest.