Wolf Midstream to buy Devon’s stake in Access pipeline

Wolf Midstream Inc., a portfolio company of the Canada Pension Plan Investment Board (CPPIB), has agreed to acquire Devon Energy Corp.’s 50% ownership interest in Access pipeline for $1.4 billion (Can.).

Expected to close in the third quarter, the deal also includes the potential for an incremental $150 million payment with the sanctioning and development of a new thermal-oil project on Devon’s Pike lease in Alberta.

Under terms of the agreement, Devon’s thermal-oil acreage is dedicated to Access pipeline for an initial term of 25 years. A market-based toll will be applied to production from Devon’s three Jackfish projects, which are fully operational.

The agreement also includes the potential for the Access pipeline toll to be reduced by as much as 30% with the development of new thermal-oil projects in the future. Devon’s next potential project is the first phase of Pike, immediately adjacent to the Jackfish complex.

Devon is operator of the joint venture leasehold with 50% working interest. Front-end engineering and design work at the first phase of Pike is complete, but the project has not been sanctioned.

Devon says its divestiture program is now complete with proceeds totaling $3.2 billion, surpassing the top end of its $2-3 billion guidance range.

CPPIB, alongside Broe Group, struck a deal last year to acquire Encana Corp.’s DJ basin assets in Colorado for $900 million (OGJ Online, Oct. 8, 2015).