Pembina Pipeline Extends its Reach

It’s the story of two homegrown Alberta companies coming together. Pembina Pipeline Corp. announced its plan to purchase Provident Energy Ltd. earlier this week, in a deal that “…will create one of the largest publicly traded energy infrastructure companies in Canada,” according to Pembina’s press release. The all-share deal is valued at $3.2 billion.

Consolidation in the midstream business is set to continue in 2012 and beyond, according to Dallas Droppo, QC, the securities lawyer at Blake, Cassels & Graydon leading the acquisition team for Pembina. “Energy infrastructure companies, like Pembina, seek low-risk long-term returns that can be passed to their shareholders as dividends. In a low-interest rate environment, there is a huge demand for dividend paying stocks,” he explains.

Jack MacGillivray, Managing Partner of the Calgary office of Norton Rose Canada, who is leading the team for Provident, also sees this deal as note-worthy. “Pembina’s acquisition of Provident is a big start to the year for Canadian energy deals,” he says. “It’s the most significant Canadian midstream corporate deal in my recent memory.”

With the acquisition, Pembina, which provides crude oil and natural gas liquids (NGL) pipeline transportation to producers, will expand its business into straddle plants that extract NGLs and ethane from natural gas, and into fractionators that split NGLs into propane, butane, etc. Provident currently operates extraction, gathering, transportation, storage and fractionation facilities, including its Redwater facility near Edmonton, where the combined company plans to expand capacity.

The deal follows on the heels of Plains Midstream Canada’s US$1.67 billion purchase of BP’s Canadian NGL business, announced in December of last year.

Blakes is representing Pembina with a team led by Dallas Droppo, QC (Project Leader), with support from Chad Schneider, Jeff Bakker and Paul Pasalic (Securities), Ben Rogers and Chris Harris (Midstream), Robert Kopstein, Carrie Aiken Bereti and Ted Thiessen (Tax), Debbie Salzberger and Litsa Kriaris (Competition), Warren Nishimura (Banking), Brian Thiessen (Employment) and Abdul-Basit Khan (Labour).

Paul, Weiss, Rifkind, Wharton & Garrison is acting as US advisor to Pembina with a team comprising Andrew Foley, Didier Malaquin and Tim Phillips (Corporate), David Mayo and Kate Belzberg (Tax), Richard Elliott (International Trade Counsel) and Laurie Penn (Employee Benefits).  

Norton Rose Canada is representing Pembina with a team led by Jack MacGillivray, and including Justin Ferrara and Scott Negraiff (Securities), Darren Hueppelsheuser and Stefan Ali (Tax), John Carleton and Brad Schneider (Competition) and Chrysten Perry and Fraser Bush (Energy).

Andrews Kurth’s Kay Lynn Brumbaugh (US Anti-trust) and Dorsey & Whitney’s Dan Miller are providing US legal counsel to Provident.

The deal is expected to close in late March or early April. [Editor: both the Pembina and Plains Midstream descriptions were published in Lexpert‘s June 2012 Big Deals section.

– Gena Smith

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