TransCanada Corp. (TRP) will acquire ConocoPhillips' (COP)
interest in the Keystone Pipeline System for about US$550 million
plus the assumption of about US$200 million of short-term debt,
thereby becoming the sole owner of the project.
The purchase price reflects ConocoPhillips' capital
contributions to date and includes an allowance for funds used
during construction, TransCanada said. It will also assume
responsibility for ConocoPhillips' share of the capital investment
required to complete the project, resulting in an incremental
commitment of about US$1.7 billion through the end of 2012. The
transaction is expected to close in the third quarter.
When completed, Keystone will be one of the largest oil-delivery
systems in North America, with the capacity to deliver 1.1 million
barrels a day. The first phase of Keystone, which will extend from
Hardisty, Alta. to the U.S. Midwest, is under construction.
The total capital cost of Keystone is expected to be about US$12
billion. About US$2.7 billion has been spent with the remaining
US$9.3 billion to be invested between now and the end of 2012.
TransCanada also said Tuesday that it will issue 50.8 million
shares at C$31.50 each through a syndicate led by RBC Capital
Markets. It will use the proceeds of about C$1.6 billion to fund
capital projects, including the acquisition of the remainder of
Keystone, for general corporate purposes and to repay short-term
debt.
Toronto trading in TransCanada is halted; the stock last changed
hands at C$33.06.
-Tara Zachariah; 416-306-2100; AskNewswires@dowjones.com