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Pacific Northern Gas Sells Stake In Prosposed Pipeline to Apache and EOG

Last updated: 08:06 07 Feb 2011 EST, First published: 09:06 07 Feb 2011 EST

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Pacific Northern Gas (TSX: PNG, TSX: PNG.PR.A) said Monday it has agreed to sell its 50% stake in Pacific Trail Pipelines L.P. for $50 million.


The buyers are Apache Canada (NYSE: APA) and EOG Resources Canada (NYSE:EOG), PNG’s partners in Pacific Trail Pipelines.


Pacific Trail Pipelines is the developer of the proposed 463 kilometres KSL natural gas pipeline, which would extend from Summit Lake, B.C. to Kitimat, B.C. The KSL Pipeline would serve the planned Kitimat liquefied natural gas (LNG) facility owned by Apache Canada and EOG Canada.


After the deal closes, Apache Canada will own 51% of the pipeline while EOG Canada will own 49%. 


PNG will receive the $50 million in two payments: $30 million upon closing and another $20 million when Apache Canada and EOG Canada starts construction of the Kitimat liquefied natural gas facility.


PNG will be the operator of the KSL Pipeline for at least the first seven years following its expected completion in 2015, subject to five year renewals after that. 


The transaction, subject to customary closing conditions, is scheduled to close by the end of February.

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