The rumble of industry consolidation echoed across Canadian energy markets yesterday as Keyera Corp. announced its largest acquisition to date—a $1.8 billion strategic purchase of Moda Midstream’s Alberta assets. This bold move signals Keyera’s determination to strengthen its position in Canada’s energy infrastructure landscape while expanding its operational footprint across three additional provinces.
“This acquisition represents more than just adding assets to our portfolio,” said Dean Setoguchi, Keyera’s President and CEO during yesterday’s investor call. “It’s about positioning Keyera at critical connection points across Canada’s energy value chain as we navigate the evolving demands of both traditional and emerging energy markets.”
The Calgary-based midstream company has historically focused its operations in Alberta’s hydrocarbon-rich regions, but this acquisition immediately extends Keyera’s reach into Saskatchewan, Manitoba, and British Columbia. Industry analysts at RBC Capital Markets note this geographic expansion could provide significant competitive advantages as Canada works to optimize its energy transportation networks amid ongoing pipeline constraints.
At the heart of the deal are Moda’s gathering and processing facilities in northern Alberta, which process approximately 380 million cubic feet per day of natural gas. These assets strategically complement Keyera’s existing operations in the Montney formation—one of North America’s most productive natural gas plays. The integration is expected to create operational synergies of $45-60 million annually by 2026, according to company projections.
The acquisition includes 570 kilometers of pipelines, three gas processing plants, and two NGL fractionation facilities. Perhaps most valuable is the addition of Moda’s proprietary terminal technology that allows for more efficient loading and transportation of natural gas liquids to premium markets.
“What makes this deal particularly noteworthy is the timing,” explains energy analyst Sarah Richardson at BMO Capital Markets. “Keyera is making this move when many competitors are hesitant to expand capital spending amid volatile commodity prices. They’re essentially buying high-quality assets at a reasonable multiple while positioning themselves for the next energy demand cycle.”
The transaction values Moda’s assets at approximately 7.5 times EBITDA, which falls below the industry average of 8-10 times for similar acquisitions in recent years. Keyera plans to finance the purchase through a combination of existing credit facilities and a $500 million equity raise announced simultaneously with the acquisition.
For investors, the expansion comes with Keyera’s commitment to maintain its quarterly dividend of $0.48 per share despite the significant capital outlay. The company projects the acquisition will be accretive to distributable cash flow per share beginning in 2025, with increasing benefits as operational synergies are realized.
Environmental considerations were notably front and center in Keyera’s announcement. The company highlighted that Moda’s facilities include some of the newest and most emission-efficient processing equipment in the industry, aligning with Keyera’s previously announced commitment to reduce emissions intensity by 30% by 2030.
“The energy transition doesn’t mean abandoning traditional infrastructure,” Setoguchi emphasized. “It means evolving that infrastructure to be more efficient while developing the capability to participate in emerging opportunities like carbon capture and hydrogen.”
The acquisition remains subject to regulatory approval, though analysts expect minimal hurdles given the complementary nature of the assets and limited competitive overlap. Keyera anticipates closing the transaction by the end of the third quarter.
As Canada’s energy landscape continues evolving, this acquisition positions Keyera to play an increasingly pivotal role in how Canadian energy resources reach domestic and international markets. For a sector that has seen its share of challenges in recent years, Keyera’s expansion serves as a reminder that strategic growth remains possible even in uncertain times.
Will this bold move inspire similar consolidation across Canada’s energy sector? Only time will tell, but Keyera has certainly signaled its intention to lead rather than follow as the industry charts its course through 2024 and beyond.
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