Steel Reef to acquire, operate Saskatchewan gas infrastructure assets

Steel Reef Infrastructure Corp., a privately held midstream company, will acquire, operate, and expand certain associated gas infrastructure assets in Saskatchewan under a Can$500 million agreement with Crescent Point Energy Corp., Calgary.

The assets consist of nine natural gas gathering and processing facilities and two gas sales pipelines currently in operation with a a total throughput capacity over 90 MMcfd. The assets do not include any oil-related infrastructure.

Under terms of the agreement, Crescent Point will enter into certain long-term take-or-pay commitments with Steel Reef in exchange for processing rights at the facilities. The expected annual cash flow to the purchaser is $47 million, excluding cash flow from third parties.

Steel Reef has committed an additional Can$30 million to fund an upcoming 12 MMcfd expansion of one of the gas processing facilities. The expansion is expected to begin in 2020 and be completed within 12-18 months following closing of the asset sale, which is expected in first quarter 2020, subject to customary closing conditions and regulatory approvals.

Crescent Point has entered into agreements to sell, or have sold, in aggregate Can$1.45 billion of assets in 2019, said Craig Bryksa, president and chief executive officer of Crescent Point. The company continues to advance negotiations for third party development of a new sales oil pipeline, expected to enhance its market access and realized pricing for its southeast Saskatchewan oil production, the company said. Management expects that the new sales oil pipeline will take 12 months to construct and bring in service, once an agreement is finalized.