Pembina Pipeline takes over Provident Energy

Pembina Pipeline Corporation of Calgary has acquired Provident Energy Ltd. for $3.24 billion. Pembina will acquire Provident’s gas fractionation operations, as well as its storage and transport businesses. The combined assets of the two companies will create an energy infrastructure company with a market capitalization of almost $8 billion, making it one of the biggest publicly traded energy companies in Canada.

Provident shareholders will receive 0.425 of a Pembina share for each Provident share held. According to a press release issued by Pembina, the January 13, 2012 TSX closing share price of Pembina was $27.90; Provident's closing TSX share price on the same day was $9.51. The offer thus puts a premium of 26.2 per cent on the value of the Provident shares by valuing them at $11.86.

Pembina’s CEO, Bob Michaleski, called the two companies’ operations “complementary, but not overlapping.” The new company will now have operations in some of North America’s fastest growing oil and gas producing regions, including the Marcellus shale gas field in the US Northeast, and the Bakken shale oil field in the West.

“Our expanded footprint will provide greater access to natural gas liquids markets across North America, and will allow us to offer customers a significantly expanded spectrum of energy services," said Michaleski.

Key growth areas for the new entity include energy infrastructure businesses in Montney, Duvernay, Alberta Deep Basin, Pelican Lake heavy oil, Athabasca oil sands, Cardium, Swan Hills, Bakken, Marcellus and Utica. Major near-term projects include Saturn and Resthaven liquids extraction facilities; Peace NGL pipeline expansion; Redwater liquids storage development; Redwater fractionator capacity expansion.

The company will operate under the Pembina name.