Veresen Midstream poised to become a leading player in the core of the Montney, one of North America's most prolific and competitive resource plays

On April 1, 2015, Veresen Midstream Limited Partnership (Veresen Midstream) closed the acquisition of certain natural gas gathering and compression assets, supporting Montney development in the Dawson area of northeastern British Columbia from Encana Corporation (Encana) and the Cutbank Ridge Partnership (CRP), a partnership between Encana and a subsidiary of Mitsubishi Corporation. As part of this transaction, Veresen Midstream agreed to undertake up to C$5 billion of new midstream expansion for Encana and CRP in the Montney region.

The aggregate purchase price of the acquisition was approximately C$760 million, based on a reimbursement of Encana's and CRP's actual costs to date associated with the acquired infrastructure. The purchase price is comprised of approximately C$435 million for operating compression facilities and pipelines, C$155 million for work in progress associated with the Saturn compressor station, and C$170 million for other work in progress, including the Sunrise and Tower gas plants and additional gas gathering pipelines. All infrastructure acquired and to be developed associated with the transaction is supported by 30-year fee-for-service arrangements with Encana and CRP.

Concurrent with this acquisition, Veresen contributed its Hythe/Steeprock gathering and processing assets to the newly created Veresen Midstream, owned equally by Veresen and affiliates of Kohlberg Kravis Roberts & Co. L.P. (KKR), in exchange for a 50% equity position valued at C$500 million and C$420 million in cash. KKR contributed C$500 million in cash to Veresen Midstream in exchange for its 50% equity position.

Veresen Midstream also closed a US$575 million drawn Term Loan B and C$1,350 million of largely undrawn syndicated credit facilities. Proceeds from these facilities, which are non-recourse to Veresen, will be used to fund the acquisition from Encana and CRP and ongoing infrastructure development.

Veresen is a publicly-traded dividend paying corporation based in Calgary, Alberta, that owns and operates energy infrastructure assets across North America.

KKR is a leading global investment firm that manages investments across multiple asset classes including private equity, energy, infrastructure, real estate, credit and hedge funds.

Encana is a leading North American energy producer that is focused on developing its strong portfolio of resource plays, held directly and indirectly through its subsidiaries, producing natural gas, oil and natural gas liquids (NGLs).

CRP is a partnership between Encana and Cutbank Dawson Gas Resources Ltd., a subsidiary of Mitsubishi Corporation, the long-term development of natural gas resources in northeast British Columbia.

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