Market Update: Spectra Buys Canadian Pipeline for $1.49 Billion

Three days after the Canadian government approved two mega deals in the energy sector, another consolidation has been announced.

Spectra Energy Corp (NYSE:SE) said today it will pay $1.49 billion for the Express-Platte Pipeline System, owned jointly by Borealis Infrastructure, the Ontario Teachers’ Pension Plan and Kinder Morgan (NYSE:KMP).  The 1,717-mile pipeline is one of three corridors that move Western Canadian crude oil to Midwest refineries and markets. Beginning in Hardisty, Alberta and terminating in Wood River, Illinois, it has a capacity of 280,000 barrels a day.

The purchase comprises $1.25 billion in cash and $240 million in debt, and is expected to add 3.5 cents per share to Spectra’s full-year earnings, the Houston-based company stated.

“The Express-Platte Pipeline System acquisition is an immediately accretive investment in a fee-based business that expands Spectra Energy’s footprint into a rapidly growing area,” Spectra President and CEO Greg Ebel said in a prepared statement.

“This system is strategically located to supply crude oil to U.S. refining markets. It also represents an incremental growth platform for Spectra Energy that enables further investment in related crude and refined product assets. Given Spectra Energy’s leading position in the natural gas midstream sector, investing in crude oil midstream assets is a logical extension of our business model.”

Pending regulatory approvals, the transaction is expected to close in the first half of 2013.