SemGroup Corporation and KKR announced they have formed a joint venture to create a Canadian midstream infrastructure platform, SemCAMS Midstream ULC. The companies also announced that SemCAMS Midstream has entered into a definitive agreement to acquire Meritage Midstream ULC and its midstream infrastructure assets for CAD 600 million. Under the terms of the joint venture, SemGroup will contribute the shares and assets of its Canadian subsidiary, SemCAMS, valued at CAD 1.15 billion, in exchange for CAD 615 million cash proceeds and 51% common equity ownership in SemCAMS Midstream.

KKR will contribute CAD 515 million of cash in exchange for 49% of the common equity ownership. KKR will also contribute CAD 300 million to acquire perpetual preferred equity. Upon close of the transaction, SemCAMS Midstream will acquire Meritage Midstream ULC, an operating portfolio of approximately 195 MMcf/d of natural gas processing capacity, 101 miles of gas gathering pipelines, 38 miles of oil gathering pipelines and 18 miles of emulsion and gas lift pipelines (Patterson Creek facilities) in the liquids-rich Montney play.

Additionally, a 200 MMcf/d gas processing expansion is currently under construction and expected to be in service by third quarter 2019. SemCAMS Midstream will own approximately 900 MMcf/d of natural gas processing capacity between the existing SemCAMS and Meritage facilities. The Wapiti Plant is ahead of schedule and is currently being commissioned to be online by the end of January 2019.

The Smoke Lake Plant and Pipestone Pipeline are on track for completion later this year. Total natural gas processing operational capacity will increase to approximately 1.3 Bcf/d following completion of the SemCAMS and Meritage projects under construction. Potential growth projects include the proposed 280 MMcf/d Pipestone sour gas plant, 100,000 bbl/d Montney-to-Market liquids pipeline and potential expansions at the Patterson Creek facility.

SemCAMS Midstream continues to evaluate other greenfield and brownfield development opportunities. The business and affairs of SemCAMS Midstream will be managed by a Board of Directors composed of seven board members, four nominated by SemGroup and three nominated by KKR, with SemGroup appointing the Chair. SemCAMS Midstream will be headquartered in Calgary and the management team will be led by SemCAMS' Dave Gosse as President.