Pembina adds infrastructure with $7.1 billion Veresen buy

bengaluru — Pembina Pipeline Corp said it would buy smaller rival Veresen in a stock-and-cash deal valued at C$9.7 billion ($7.10 billion), including debt, giving the Canadian pipeline operator access to natural gas pipelines and processing infrastructure.

The combined company will have a strong position in the Western Canadian Sedimentary Basin, home to the world’s third largest crude reserves.

A rebound in oil prices from a twoyear slump and prospects of friendlier regulatory and tax policies in the United States are stoking consolidation in the pipeline industry.

After the deal with Veresen, Pembina will own about 5.8 billion cubic feet

When we combine with Veresen... we put the P back in pipelines in our name Michael Dilger, CEO of Pembina

per day of gas processing infrastructure across Western Canada by 2018. The combined company will have about 3 million barrels of oil equivalent per day of pipeline capacity.

“When we combine with Veresen who is... 68 per cent pipelines, we put the P back in pipelines in our name,” Pembina’s chief executive Michael Dilger said on a conference call, speaking of the breakup of Veresen’s operating margins.

At present, pipelines account for about 46 per cent of Pembina’s margins.