Enbridge selling major Saskatchewan pipeline system in Cdn$1 billion deal
Enbridge (TSX, NYSE:ENB), Canada’s largest pipeline company, is selling a key Saskatchewan pipeline system for Cdn$1.075 billion to Tundra Energy Marketing as it looks for extra cash to proceed with the takeover of Houston-based Spectra Energy Corp.
Cash from the sale will be used to to proceed with the takeover of Spectra Energy and fund other growth projects, Enbridge said.
The South East Saskatchewan Pipeline System includes over 1,600 kilometres of crude oil and liquids gathering pipelines and about 547 kilometres of trunk line, which feeds into the Enbridge Mainline system and four truck terminals.
Manitoba’s Mainline is the main pipe transporting Canadian crude to US markets. The Saskatchewan system currently carries approximately 175,000 barrels of crude oil per day to that location, which is a key hub for barrels in Canada’s southern prairies region.
The deal is expected to close in late 2016, subject to various regulatory approvals.
Enbridge also said that, in conjunction with the proposed Spectra Energy merger, which is supposed to create North America’s largest energy infrastructure company, the company intends to divest around $2 billion of non-core assets over the next year to further strengthen its balance sheet and provide for additional financing flexibility.