Mont­ney: The Next Gen­er­a­tion

Alberta Oil - - OB­SERVER -

THE PAR­TIC­U­LARS: In Septem­ber, Cal­gary-based En­bridge an­nounced it was ac­quir­ing Spec­tra En­ergy of Hous­ton for about $37 bil­lion to cre­ate North Amer­ica’s largest en­ergy in­fra­struc­ture com­pany. It’s the most sig­nif­i­cant M&A deal since nat­u­ral gas prices tanked in 2014. Un­til now, En­bridge’s main line of busi­ness was send­ing Al­ber­tan crude to U.S. Gulf Coast re­finer­ies, while Spec­tra fo­cused on de­liv­er­ing nat­u­ral gas to the U.S. North­east. Be­cause of those split in­ter­ests, it’s un­likely the deal will fall foul of anti-trust laws. En­bridge CEO Al Monaco will con­tinue to head the new firm from Cal­gary while Greg Ebel, Spec­tra’s CEO, will be­come its non-ex­ec­u­tive chair­man.

THE PAY­OFF: When the deal closes early next year, En­bridge will is­sue about 694 mil­lion new shares and as­sume some US$22 bil­lion of Spec­tra debt. En­bridge share­hold­ers will fin­ish up own­ing about 57 per­cent of the post-deal firm in a move that they ex­pect will save $540 mil­lion an­nu­ally. En­bridge also plans to di­vest about US$2 bil­lion in non-core as­sets.

The new En­bridge board will be com­prised of 13 di­rec­tors: eight of them des­ig­nated by En­bridge and five des­ig­nated by Spec­tra. “Over the last two years, we’ve been fo­cused on iden­ti­fy­ing op­por­tu­ni­ties that would ex­tend and di­ver­sify our as­set base and sources of growth be­yond 2019,” Monaco said, af­ter an­nounc­ing the deal. In Au­gust, En­bridge bought a mi­nor­ity stake in the Bakken Pipe­line and a stake in EnBW’s Hohe See, a Euro­pean off­shore wind power project.

Cana­dian pipe­line ri­val Tran­sCanada com­pleted its own US$10.2-bil­lion takeover deal in July, ac­quir­ing Columbia Pipe­line Group.

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