Tundra Energy to acquire pipeline assets in South Prairie from Enbridge for $820.9 million

Tundra Energy Marketing (TEML), a wholly owned subsidiary of James Richardson & Sons, has signed an agreement to acquire pipelines assets in the South Prairie Region from an affiliate of Canadian-based Enbridge Income Fund for C$1.075 billion ($820.9 million).

The assets included in the agreement are liquids pipelines and facilities in south-east Saskatchewan and south-west Manitoba.

As part of the agreement, TEML will acquire the Saskatchewan Gathering, Westspur, and Weyburn pipeline systems, which comprise more than 1,600km of crude oil and liquids gathering pipelines.

The assets also include about 547km of trunk line, and related storage and other facilities that deliver around 175,000 barrels per day of crude oil to Enbridge's Mainline system at Cromer, Manitoba.

Other assets are Manitoba interconnection facilities and the Virden NGL system.

Enbridge said that the Bakken Expansion Pipeline, which enables delivery of crude oil production in North Dakota to the Mainline System at Cromer, Manitoba, is not part of the transaction.

Upon closing of the transaction, TEML will handle more than 250,000 barrels per day of crude oil production from Saskatchewan, Manitoba and North Dakota.

The company will also continue to have more than 600,000 barrels of crude oil storage capacity.

Enbridge Income Fund president Perry Schuldhaus said: "Proceeds from the sale will be re-invested in the Fund's C$9 billion ($6.873 billion) portfolio of attractive secured organic growth projects including the Wood Buffalo Extension, Athabasca Twin and Norlite projects, which are expected to come into service in 2017, and grow cash flow available for distribution.

"Importantly, the funds generated by this disposition will be sufficient to meet all of the Fund's currently anticipated equity capital requirements through 2017, to support the organic growth that we expect will drive 10% annual increases in ENF's dividend through 2019."

The transaction is subject to various regulatory approvals and is expected to close late this year.