Canadian Producer Sells Gas Midstream Assets
Canadian producer Paramount Resources said June 28 it has reached an agreement to sell certain Montney midstream assets to privately-held CSV Midstream Solutions for C$330mn (US$252mn) and a C$140mn capital commitment to complete an expansion of the assets.
Upon completion of the C$420mn transaction – expected in July 2019 – CSV Midstream will assume operatorship of the Karr 6-18 facility, which includes 100mn ft3/day of raw sour gas compression and dehydration capacity and 15,000 b/d of raw hydrocarbon liquids handling capacity. The expansion, which is under construction and scheduled for completion by CSV Midstream in 2H 2020, will add 150mn ft3/day of raw natural gas handling capacity (including 70mn ft3/day of raw sour gas processing capacity) and 30,000 b/d of liquids handling capacity.
As part of the transaction, Paramount and CSV Midstream will agree a fee-for-service arrangement, a reliability agreement and a take-or-pay volume commitment that will end 20 years after completion of the expansion.
Paramount said the sale of Karr 6-18 will allow it to continue to develop its large-scale Montney resource play at Karr, growing production and maintaining its financial strength. Paramount’s natural gas production averaged 308mn ft3/day in 1Q 2019, with its Karr operations providing about 75mn ft3/day of that total.
Proceeds from the transaction will initially be used to reduce amounts drawn on Paramount’s existing C$1.5bn credit facility – which totaled C$827.3mn at the end of March 2019 – and to record a gain on the sale of about C$160mn.