New to the scene as of three months ago, privately held CanadianMidstream Services Ltd. (CMSL) made its first acquisition when itacquired a significant interest in sour natural gas processingfacilities in west central Alberta from Poco Petroleum. Formed inCalgary by four former executives of Pan East Petroleum, which wasbought by Poco in December, CMSL aims to capitalize on assetacquisition opportunities.
Right now, said Vice President Steve VanSickle, formerly PanEast manager of business development, some Canadian producers arelooking to raise capital through asset sales. “The equity marketfor the producers was beaten down a little bit. This is a way forproducers to free up trapped capital.. We’re not a competitor ofproducers.” CMSL plans to buy operating and controlling interestsin midstream assets, particularly in western Canada west of thefifth meridian. This is where the company’s executives have hadexperience with producing facilities.
The newly acquired facilities include the Brazeau River sour gasprocessing plant, which has a gross capacity of about 218 MMcf/d,and a controlling interest in 340 Km of gas pipelines, covering anarea of 845 square Km that connects more than 100 wells to the gasplant. “There are seven separate gathering systems, operating atdifferent pressures, feeding into the [processing] plant.” CMSL andthe processing plant’s operator, Gulf Midstream Services ofCalgary, are examining options for enhancing recovery efficienciesof the plant, which was built in 1969. Poco and CMSL also agreed tocertain 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 9.125Million common share purchase, which gives the holder the right,under certain terms and conditions, to purchase additional commonshares. In addition to this new equity CMSL established a creditfacility with a major Canadian chartered bank, and has about $17Million in un-drawn bank lines.
Energy Spectrum Partners LP of Dallas was the largest subscriberand now owns more than 50% of the outstanding shares. James W.Spann, chief investment officer of Energy Spectrum, said “We arepleased that our second investment in Alberta, and our largest todate, is with a company whose ‘mid-streaming’ strategy is socompatible with our own.”
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