The Hythe plant processes both sour and sweet natural gas, while the Steeprock plant is a sour gas processing facility. Combined, the plants have a capacity of 516 million cubic feet a day as well as 370 kilometres of gas gathering lines.
In addition, the two companies have agreed to have Encana continue to supply the plants with natural gas. After a transition period, Veresen will become the operator of the two plants, and plans to retain all current employees. In order for Encana to coordinate its drilling and production in the area, it will be the contract operator of the compression and gas gathering system.
Stephen White, President and Chief Executive Officer says, "This transaction establishes a high-quality, independent natural gas midstream business for Veresen which we expect will generate attractive returns and make a significant contribution to our cash flow."
He adds, "The Hythe/Steeprock complex is strategically located in the heart of a high-growth region focused on Montney drilling, and is underpinned by a competitive, long-term gathering and processing fee agreement with an outstanding producer partner in Encana."
In order to fund the purchase, Veresen says it has entered into a $303 million bought deal financing. The deal is expected to be completed in the first quarter of 2012.