Shares in Vancouver-based Pacific Northern Gas (TSX:PNG) shot up more than 20% Monday after AltaGas (TSX:ALA) tendered a $230 million bid for the pipeline company.
Calgary-based AltaGas, which processes and delivers natural gas to more than 75,000 customers in Western Canada, said the deal is an “outstanding strategic fit” for the company.
PNG’s pipeline system is well positioned to “capitalize on growing demand” for additional pipeline capacity along the Summit Lake to Kitimat-Prince Rupert territory, AltaGas said.
PNG also operates a gas distribution system in Northeast B.C. that ties in with other major pipeline systems and is strategically located near the Horn River and Montney gas fields.
AltaGas’ bid for PNG has been unanimously backed by both companies and comes at a time when large gas companies are looking to build liquid natural gas (LNG) export terminals along the northwest coast of B.C. to export gas to Asia.
Chief among the projects is Kitimat LNG, a $3 billion export terminal designed to take advantage of higher natural gas prices in key Asian markets.
In February, PNG sold a 50% stake in its Pacific Trail Pipeline Partnership, which would serve the export terminal, to Kitimat LNG partners Apache Canada and EOG Resources for $50 million.
At press time, PNG shares were valued at $36.66.
Joel McKay
@jmckaybiv