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Enbridge completes Alliance Pipeline and Aux Sable sale to Pembina

Energy, Market News
TSX:ENB
01 April 2024 11:04 (EST)
Enbridge corporate office building.

(Source: Enbridge)

Canadian energy stock Enbridge (TSX:ENB) has completed the sale of two significant oil assets in northeastern British Columbia.

The Calgary-based pipeline operator recently closed its agreement to sell its 50 per cent interest in the Alliance Pipeline and its 42.7 per cent interest in Aux Sable to Pembina Pipeline Corp. (TSX:PPL).

The transaction represents a purchase price of $3.1 billion, including non-recourse debt at Alliance of around $0.3 billion.

Alliance delivers liquids rich natural gas sourced in northeast B.C., northwest Alberta and the Bakken region to Chicago. Aux Sable operates natural gas liquid (NGL) extraction and fractionation facilities in Canada and the United States, with extraction rights on Alliance, offering connectivity to key U.S. NGL hubs.

Initially announced on Dec. 13, 2023, the sale price represents an attractive valuation of approximately 11 times projected 2024 earnings before interest, taxes, depreciation and amortization (EBITDA) for Alliance and approximately seven times for Aux Sable, which is in line with other commodity exposed businesses.

The company stated that this divestiture represents a key element of its financing plan, and the proceeds will fund a portion of its U.S. gas utilities acquisitions and be used for debt reduction.

Meanwhile, Pembina, a long-standing partner on Alliance and the current operator of Aux Sable, will also assume operatorship of Alliance. Pembina updated its 2024 adjusted EBITDA guidance range between $4.05 billion to $4.30 billion (up from the previous $3.725 billion to $4.025 billion). This is intended to reflect the incremental contribution from increased ownership of Alliance and Aux Sable.

Pembina Pipeline Corp. is an energy transportation and midstream service provider. Pembina owns an integrated network of hydrocarbon liquids and natural gas pipelines, gas gathering and processing facilities, oil and natural gas liquids infrastructure and logistics services, and an export terminals business.

Enbridge supplies millions of customers with North American natural gas, oil and renewable power networks, while growing its European offshore wind portfolio and advancing new technologies in hydrogen, renewable natural gas, and carbon capture and storage.

Enbridge Inc. stock (TSX:ENB) opened trading at C$49.10 per share. The stock is down more than 5 per cent year-over-year, and remains flat since 2019.

Pembina Pipeline Corp. stock (TSX:PPL) opened trading at C$48.00 per share. The stock is up more than 11.3 per cent in the past year but is also down more than 2 per cent over the past five years.

Join the discussion: Find out what everybody’s saying about these pipeline stocks and their growth outlook on the Enbridge Inc. Bullboard and the Pembina Pipeline Corp. Bullboard, and check out the rest of Stockhouse’s stock forums and message boards.

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