Canadian Midstream Makes First Acquisition
New to the scene as of three months ago, privately held Canadian
Midstream Services Ltd. (CMSL) made its first acquisition when it
acquired a significant interest in sour natural gas processing
facilities in west central Alberta from Poco Petroleum. Formed in
Calgary by four former executives of Pan East Petroleum, which was
bought by Poco in December, CMSL aims to capitalize on asset
Right now, said Vice President Steve VanSickle, formerly Pan
East manager of business development, some Canadian producers are
looking to raise capital through asset sales. "The equity market
for the producers was beaten down a little bit. This is a way for
producers to free up trapped capital.. We're not a competitor of
producers." CMSL plans to buy operating and controlling interests
in midstream assets, particularly in western Canada west of the
fifth meridian. This is where the company's executives have had
experience with producing facilities.
The newly acquired facilities include the Brazeau River sour gas
processing plant, which has a gross capacity of about 218 MMcf/d,
and a controlling interest in 340 Km of gas pipelines, covering an
area of 845 square Km that connects more than 100 wells to the gas
plant. "There are seven separate gathering systems, operating at
different pressures, feeding into the [processing] plant." CMSL and
the processing plant's operator, Gulf Midstream Services of
Calgary, are examining options for enhancing recovery efficiencies
of the plant, which was built in 1969. Poco and CMSL also agreed to
certain ongoing commitments in the area surrounding the facility.
CMSL just closed a private equity issue for total proceeds of
$36.5 Million consisting of 18.25 Million common shares and 9.125
Million common share purchase, which gives the holder the right,
under certain terms and conditions, to purchase additional common
shares. In addition to this new equity CMSL established a credit
facility with a major Canadian chartered bank, and has about $17
Million in un-drawn bank lines.
Energy Spectrum Partners LP of Dallas was the largest subscriber
and now owns more than 50% of the outstanding shares. James W.
Spann, chief investment officer of Energy Spectrum, said "We are
pleased that our second investment in Alberta, and our largest to
date, is with a company whose 'mid-streaming' strategy is so
compatible with our own."
©Copyright 1999 Intelligence Press Inc. All rights reserved. The
preceding news report may not be republished or redistributed, in
whole or in part, in any form, without prior written consent of
Intelligence Press, Inc.