Unconventional Oil

[kraftdinner]

Inter Pipeline buys $760-million Corridor to oil sands


2007-06-15 11:29 MT - News Release

Mr. Jeremy Roberge reports

INTER PIPELINE FUND COMPLETES ACQUISITION OF CORRIDOR OIL SANDS PIPELINE SYSTEM

Inter Pipeline Fund has completed the acquisition of Corridor Pipeline System from an affiliate of Kinder Morgan Inc. Corridor Pipeline is the sole transporter of diluted bitumen produced by the Athabasca oil sands project, a major Alberta-based oil sands mining and upgrading project. The transaction involved the purchase of all outstanding share capital of Terasen Pipelines (Corridor) Inc. for consideration of $760-million before closing adjustments. Financing for the acquisition was provided from Inter Pipeline's existing bank credit facilities and the assumption of approximately $460-million of existing debt held within Terasen Pipelines (Corridor) Inc.

Inter Pipeline has also assumed responsibility for the completion of an estimated $1.8-billion expansion of Corridor Pipeline. This project, currently in construction, will increase diluted bitumen capacity on the Corridor Pipeline system from 300,000 barrels per day to approximately 465,000 barrels per day by 2010. At closing, Inter Pipeline assumed approximately $300-million in additional debt associated with construction in progress.

"Oil sands transportation is an exciting area of growth for Inter Pipeline," stated David Fesyk, president and chief executive officer of Inter Pipeline Fund. "Corridor is a world-scale pipeline system with excellent development potential. This acquisition solidifies Inter Pipeline's position as the dominant oil sands-gathering business in Canada."

Transaction highlights:


Provides transportation service to the Athabasca oil sands project's leases, which are estimated to contain over 10 billion barrels of minable bitumen in place;
Generates highly stable and predictable cash flow through a 25-year ship-or-pay contract with creditworthy shippers;
Strong organic development potential including the current Corridor Pipeline expansion project and future expansion opportunities;
Provides approximately 25 per cent accretion to cash available for distribution to Inter Pipeline's unitholders following completion of the current expansion project;
Materially mitigates the impact of proposed new tax legislation on Inter Pipeline's cash available for distribution to unitholders, as outlined in the federal government's tax fairness plan.

We seek Safe Harbor.