Tidewater gets $85mm cash injection with sale of new Montney gas plant cogen units

Image: Joey Podlubny/JWN

Tidewater Midstream and Infrastructure has sold a piece of the new Montney gas plant it is currently building near Beaverlodge, Alta.

The company announced this week that privately held Kineticor Resource Corp. has purchased the cogeneration units at Tidewater’s Pipestone gas plant with a single cash payment of $85 million.

Tidewater will manage the final construction of the cogeneration units and day-to-day operations once in service, while Kineticor will supply power to the plant once construction is complete.

The sale of the 32MW units for $85 million implies proceeds of $2.7 million per megawatt, which is above new-build costs of $2.0 million per megawatt, GMP FirstEnergy analyst Ian Gillies wrote in a research note.

“We expect that the strong sales price on the Pipestone cogeneration units stems from Tidewater entering into a long-term power purchase agreement with the buyer, Kineticor, to supply power to the facility in exchange for fixed energy payments,” Gillies wrote.

“The proceeds from the divestiture will be used to fund the company’s 2019 capital program...additionally, this transaction will afford Tidewater to pursue unsanctioned capital projects due to its improved leverage metrics.”

Tidewater may use a portion of the $85 million in proceeds towards incremental investments at Pipestone, he added.

“The company is currently in discussions with producers regarding additional capacity at Pipestone, which could also include a liquids hub at the facility.”

The 100 mmcf/d Montney-region gas plant is approximately 70 percent complete and expected to be commissioned in Q3/2019, Tidewater said.

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