Enbridge Selling Saskatchewan Pipeline To Tundra

(RTTNews) - Canadian pipeline operator Enbridge Inc. (ENB, ENB.TO) said it has agreed to sell its liquids pipeline assets in the South Prairie Region, including the Saskatchewan pipeline system, to privately-held midstream company Tundra Energy Marketing Ltd. for C$1.075 billion in cash.

The assets being sold are liquids pipelines and related facilities in southeast Saskatchewan and southwest Manitoba. These include the Saskatchewan Gathering and Weyburn gathering systems as well as the Westspur trunk line.

However, the sale does not include the Bakken Expansion Pipeline, which enables delivery of crude oil production in North Dakota to the Mainline System at Cromer, Manitoba. The transaction is expected to close around the end of the fourth quarter of 2016.

The South East Saskatchewan pipeline system includes more than 1,600 kilometers of crude oil and liquids gathering pipelines, about 547 kilometers of trunk line; and four tuck terminals.

The system currently transports about 175,000 barrels of crude oil per day to Enbridge's Mainline system at Cromer, Manitoba, where the main terminal of Tundra's Manitoba crude oil gathering system and interconnection with Enbridge's Bakken Expansion Pipeline is also located.

Enbridge Income Fund Holdings Inc. (ENF.TO) said it will re-invest proceeds from the sale in the Fund's C$9 billion portfolio of secured organic growth projects including the Wood Buffalo Extension, Athabasca Twin and Norlite projects, which are expected to come into service in 2017.

In conjunction with its proposed acquisition of Houston-based Spectra Energy Corp. (SE), Enbridge has said it plans to divest of about C$2 billion of non-core assets over the next year to further strengthen its consolidated balance sheet and provide for additional financing flexibility.

In early September, Enbridge agreed to acquire Spectra Energy in an all-stock deal that values Spectra's common stock at about C$37 billion. The transaction will create the largest energy infrastructure company in North America.

Meanwhile, Tundra Energy said that following closing of Saskatchewan Pipeline transaction, it will handle over 250,000 barrels per day of crude oil production from Saskatchewan, Manitoba and North Dakota.

The company will also continue to have over 600,000 barrels of crude oil storage capacity and the ability to load unit trains for its customers at Cromer, Manitoba.

Tundra said that all employees of Enbridge currently working on the SE Saskatchewan system are expected to join Tundra following closing of the transaction.