Whitecap divests partial interests in Canadian gas processing infrastructure

In separate deals, Topaz Energy Corp. and Pembina Pipeline Corp. have agreed to acquire working interests in certain gas processing infrastructure in Canada from Whitecap Resources Inc. for $520 million (Can.).

Musreau gas processing

Topaz Energy, Calgary, completed a deal to acquire a 50% working interest in Whitecap’s newly commissioned Musreau 05-09 natural gas condensate plant for $100 million (Can.). Whitecap will remain as operator of the plant, which was recently built to enable further development and production growth in the Alberta Montney resource area.

In March, Whitecap completed commissioning and start-up of the Musreau plant which includes natural gas compression capacity of 43 MMcfd and condensate stabilization capacity of 12,500 b/d. After bringing on the first eight wells, the plant throughput has ramped up to 14,000 boe/d. Whitecap Montney production at Musreau is liquids-rich, with wells that will produce upwards of 75% liquids from two Montney benches, the company said. The operator expects the plant to reach capacity by end-2024 after bringing online eight additional wells.

Whitecap and Topaz also entered commitments that provide Topaz with fixed, take-or-pay revenue for a 10-year term and preferential capacity dedication for a subsequent 7-year term, during which Topaz will not be responsible for operating or maintenance costs.

Kaybob, Lator gas processing

In a separate deal, Pembina Gas Infrastructure Inc. (PGI), a gas processing entity jointly owned by Pembina Pipeline Corp. and KKR, agreed to acquire a 50% working interest in Whitecap’s 15-07 Kaybob complex and to help fund infrastructure development for Whitecap’s Motney plant at Lator. Gross proceeds related to the transaction are $420 million (Can.) ($252 million net to Pembina).

Whitecap will remain as operator of the Kaybob complex, which includes natural gas processing capacity of 165 MMcfd and condensate stabilization capacity of 15,000 b/d. At closing—expected in third-quarter 2024 subject to conditions and regulatory approvals—Whitecap will enter long-term fixed take-or-pay commitment with PGI to access their working interest capacity.

Whitecap has reached a positive final investment decision for the Lator plant. Whitecap, with 90,000 acres and up to 450 identified top tier Montney locations, expects Lator to be the next stage of growth for the company. Full-scale development of Lator is expected to begin in 2026 with start up in late 2026 to early 2027 and a ramp up to capacity by late 2029.

Whitecap will design, construct, and operate the future Montney plant at Lator and PGI will fund 100% of the new battery and gathering lateral (which PGI will own) which includes natural gas compression capacity of 150 MMcfd and condensate stabilization capacity of 10,000-15,000 b/d. Whitecap will enter into a long-term take-or-pay agreement for PGI’s capacity in the Kaybob complex and will commit to an area of dedication to PGI for all volumes Whitecap produces out of the area.

In addition to PGI’s transaction, Pembina signed a combination of new and extended long-term integrated transportation, fractionation, and marketing services agreements with Whitecap, including a dedication of future growth volumes from Whitecap's Kaybob and Lator developments.