Pembina Pipeline Buys Enbridge Assets in $2.3 Billion Deal, Easing Debt Concerns

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Pembina Pipeline Buys Enbridge Assets in $2.3 Billion Deal, Easing Debt Concerns

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 A pile of 100 US Dollar bills (© Shutterstock/RomanR)
A pile of 100 US Dollar bills (© Shutterstock/RomanR)

Pembina Pipeline Corporation has agreed to acquire Enbridge Inc.'s (ENB.TO) remaining interests in the Alliance Pipeline, Aux Sable, and NRGreen joint ventures for $2.30 billion (C$3.1 billion).

The strategic move expands Pembina's midstream footprint and strengthens its position in key energy transportation corridors.

The acquisition includes Enbridge's 50% interest in Alliance Pipeline, a critical artery for delivering natural gas liquids (NGLs) from Western Canada to Chicago.

Additionally, Pembina will acquire Enbridge's 42.7% interest in Aux Sable, operator of NGL extraction and fractionation facilities in Canada and the U.S., and full ownership of NRGreen, a renewable natural gas (RNG) joint venture.

Pembina currently holds a 50% stake in the Canadian operations of Aux Sable and NRGreen, and approximately 42.7% in Aux Sable's U.S. operations. This acquisition will consolidate ownership, providing Pembina with greater control and flexibility in managing these assets.

The deal also includes the assumption of C$327 million of debt by Pembina, offering Enbridge some leverage relief following its recent $14 billion acquisition of three Dominion Energy natural gas distribution companies.

Enbridge stated the sale proceeds will be used to partially fund the U.S. acquisitions and further reduce debt.

"This transaction is a significant step towards achieving Pembina's long-term growth strategy," said Scott Smith, Pembina's President and CEO.

"By consolidating ownership of these key assets, we are strengthening our position in core NGL and RNG markets, enhancing our operational efficiency, and expanding our growth opportunities."

The transaction is expected to close in the first half of 2024, subject to regulatory approvals and customary closing conditions.

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