Taylor NGL LP will increase its total natural gas processing capacity by 74% under a plan to acquire the Harmattan Gas Processing Complex for C$189 million. The complex, located about 60 miles from Calgary, includes a 400 MMcf/d processing plant and gas gathering systems, a deep-cut natural gas liquids (NGL) extraction plant and fractionation and terminaling facilities.
With the acquisition, Calgary-based Taylor will increase its total licensed gas processing capacity to 1.2 Bcf/d, and increase its net NGL production capacity by 112%, or to 62,100 bbl/d. About 93% of the revenue of the Harmattan complex is derived from fee-for-service or fixed margin commodity sales arrangements.
The Harmattan complex "provides a predominantly fee-for-service and fixed margin revenue stream that further diversifies the Partnership's business and significantly increases its market capitalization," said Taylor CEO Bob Pritchard. He called the complex "an excellent fit for Taylor, as it derives revenue from natural gas gathering and processing as well as deep-cut NGL extraction, activities in which Taylor has established expertise and a presence in the industry."
The facilities are located in a multi-zone, natural gas-prone area, and it has a capture area encompassing approximately 1,750 square kilometers (1,087 square miles) accessed by 500 kilometers (310 miles) of owned and third-party raw gas gathering pipelines.
Taylor plans to finance the acquisition through a public offering of partnership units and convertible debentures, and a credit facility. Taylor has entered into a bought-deal financing agreement with a syndicate of underwriters, which will issue 13 million units at C$9.25 per unit and C$50 million of 5.85% unsecured subordinated debentures to raise total gross proceeds of approximately C$170 million. The acquisition, which is expected to close on March 22, is expected to result in an immediate increase in cash available for distribution.
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