08:26 AM EDT, 07/02/2024 (MT Newswires) -- Pembina Pipeline ( PBA ) said Tuesday that Pembina Gas Infrastructure (PGI), a premier gas processing entity in Western Canada jointly owned by Pembina and KKR, agreed Tuesday to acquire a 50% working interest in Whitecap Resources ( SPGYF ) 's 15-07 Kaybob complex while supporting future infrastructure development for Whitecap's Lator growth area.

Pembina said the gross proceeds related to the transaction are valued at $420 million, with $252 million net to the company. Closing is expected in the third quarter. The transaction will initially be funded using PGI's existing credit facility.

The Kaybob complex includes a natural gas processing capacity of 165 million cubic feet per day and condensate stabilization capacity of 15,000 barrels per day, Pembina said.

Under the terms, Whitecap will will retain operatorship of the assets. In turn, Whitecap will enter into a long-term take-or-pay agreement for PGI's capacity in the Kaybob complex and will commit to an area of dedication to PGI for all volumes Whitecap produces out of the area.

Whitecap also entered into long-term take-or-pay agreements with PGI for priority access to the Lator infrastructure. Whitecap also signed additional long-term take-or-pay contracts with PGI at the Musreau gas plant within the Cutbank complex and the K3 gas plant.

Pembina said it also signed a combination of new and extended long-term integrated transportation, fractionation, and marketing services agreements with Whitecap, including a dedication of future growth volumes from the Kaybob and Lator developments.

"Our ability to provide unique and value-added solutions to support Whitecap's development in both the Montney and Duvernay demonstrates our leading advantage and is why our customers choose us," said Chris Rousch, PGI's president and Chief Executive. "These plays have significant growth potential, and we are proud to be Whitecap's infrastructure partner."

For its part, Whitecap said the long-term take-or-pay commitments, synergies from its strategic partnership with PGI, interest expense savings and tax adjustments have a minimal net impact to its forecasted 2025 and long-term funds flow.

On outlook. Whitecap said its balance sheet is "in excellent shape" and will be further strengthened with proceeds from the partial sale of the infrastructure assets. It added given the "significant strength" in its balance sheet, it expects to allocate approximately $200 million in the second half of the year towards share repurchases. Whitecap anticipates this will reduce its common shares outstanding by approximately 3% while still maintaining net debt below $1 billion (0.6x Debt/EBITDA), with approximately $1.9 billion of unused credit capacity, providing it with capital allocation options to continue to grow its business.

Separately, Topaz Energy ( TPZEF ) completed its acquisition of a 50% non-operated working interest in Whitecap's Alberta Montney facility for $100 million.

As a result, Topaz expects its 2024 infrastructure processing revenue and other income to increase to a range of $75.5 million to $78.0 million from the previous guidance of $69.0 million to $71.0 million. On an annualized basis, Topaz noted, the facility acquisition provides 19% to 20% processing revenue and other income growth and pro forma, Topaz's processing revenue and other income represents approximately 45% of the company's current dividend, "further enhancing the reliability" of its shareholder return strategy. Topaz's 2024e year end net debt to EBITDA is estimated to increase from 0.8 times to 1.1 times, based on Topaz's estimated 2024 year end net debt range of $340 million to $350 million. Topaz added it will provide a "fulsome guidance update" along with the upcoming release of the company's second quarter financial results.