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Midcoast Targeting Canadian Midstream

Midcoast Targeting Canadian Midstream

Midcoast Energy subsidiary Midcoast Canada Operating Corp. bought the Calmar gas treating plant and gathering system in Alberta from Probe Exploration Inc. for C$20 million (US$13.2 million). The company has its sights on similar acquisitions in the future.

The assets include a 30 MMcf/day amine sweetening plant, 30 miles of 10-inch and 6-inch gathering pipeline and about 4,000 hp of compression near Edmonton, AB. The system currently gathers and treats about 26 MMcf/day of sour gas from 27 producing wells operated by Probe and Courage Energy Inc. The Calmar gas plant is the only "zero emissions" sour gas treating plant in the Leduc-Woodbend area of Alberta.

In conjunction with the purchase, Probe made a gas gathering and treating agreement with Midcoast, including the long-term dedication of Probe's reserves in the Leduc Field, a right of first refusal agreement on new or existing midstream assets within a defined 390 square mile area of interest, and assignment to Midcoast of an existing third-party gathering and treating agreement.

Dan Tutcher, president of Midcoast, said, "This acquisition is the first step toward our goal of developing a larger midstream asset base in Canada. We believe the environment in Canada is favorable for other production companies to explore the option of monetizing their midstream natural gas assets in order to provide capital for the future development of their reserve base. We will continue to aggressively seek such acquisition and/or joint venture opportunities to further expand our presence in the Alberta region." Probe and Midcoast are examining other potential joint business opportunities.

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