Dynegy Builds Canadian Midstream, Buys Compton Assets
Dynegy Inc., formerly NGC Corp. has purchased Compton
Petroleum's Canadian midstream assets, including 78 miles of
pipelines, and the 82 MMcf/d Mazeppa and 15 MMcf/d Gladys
processing plants in southern Alberta, for C$60 million (US$42
The deal also includes a transportation, processing and revenue
sharing agreement whereby Dynegy committed to give Compton
C$250,000 (US$178,000) a piece for up to 50 new wells in the area,
or up to C$25 million (US$17.8 million).
"The acquisition of these midstream assets is a key step in our
strategy to reestablish Dynegy's Canadian asset base," said Dynegy
Chairman Chuck Watson. "The Mazeppa facilities will complement our
existing gas marketing and trading business. In addition, our
continuing relationship with Compton will generate future
opportunities to add throughput to these facilities. We believe
there are significant opportunities in the Canadian midstream
business as this market continues to evolve."
Compton CEO Ernie Sapieha said the deal will eliminate Compton's
debt and help create lines of credit in excess of C$52 million. The
company now plans to pursue an accelerated drilling program in
southern Alberta. Compton is planning an initial 18-month, minimum
60-well drilling program in the area, targeting deep gas reserves.
"The drilling agreement with Dynegy and their planned expenditures
in the area will allow us to maintain low finding and development
costs while actively pursuing exploration prospects," said Sapieha.
Calgary-based Compton holds reserves in excess of 200 Bcf, 95%
of which are gas and associated liquids.
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