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TransCanada To Acquire Remaining ConocoPhillips' Interest in Keystone Pipeline

TransCanada To Acquire Remaining ConocoPhillips' Interest in Keystone Pipeline; To Issue $1.6 Bln of Common Shares

(RTTNews) - Tuesday, energy infrastructure giant TransCanada Corp.(TRP.TO: News ,TRP: News ) revealed an agreement to acquire Keystone Pipeline System through the acquisition of ConocoPhillips' (COP: News ) remaining interest in the project for approximately US$550 million plus the assumption of approximately US$200 million of short-term debt.

Consequently, TransCanada will become the sole owner of Keystone Pipeline System. The purchase price reflects ConocoPhillips' capital contributions and includes an allowance for funds used during construction. TransCanada will also assume responsibility for ConocoPhillips' share of the capital investment required to complete the project of approximately US$1.7 billion through the end of 2012. The transaction is expected to close in third quarter 2009.

Keystone will be one of the largest oil delivery systems in North America with the capacity to deliver 1.1 million barrels per day.

Hal Kvisle, TransCanada president and chief executive officer said, "This acquisition represents a unique opportunity for TransCanada to become the exclusive owner of an important oil transmission system that will play a vital role in transporting a growing supply of Canadian crude oil to the largest refining markets in the United States for decades to come."

Keystone has secured long-term commitments for 910,000 barrels per day for an average term of approximately 18 years which represents approximately 83% of the commercial design of the system. The company disclosed that it has plans in the future to expand from 1.1 million barrels per day to 1.5 million barrels per day in response to additional market demand.

The first phase of Keystone is currently under construction and will have an initial nominal capacity of 435,000 barrels per day. The line will subsequently be expanded to a nominal capacity of 590,000 barrels per day.
Keystone is also currently seeking the necessary regulatory approvals in Canada and the U.S. to construct and operate an expansion and extension of the pipeline system that will provide additional capacity of 500,000 barrels per day.

The total capital cost of Keystone is expected to be around US$12 billion, of which about US$2.7 billion has been spent to date, with the remaining US$9.3 billion to be invested between now and the end of 2012.

In a separate announcement TransCanada revealed that the company will issue C$1.6 billion of common shares. Accordingly, it has entered into an agreement with a syndicate of underwriters, led by RBC Capital Markets, BMO Capital Markets, and TD Securities Inc. where they have agreed to purchase from TransCanada and sell to the public 50.80 million Common Shares.


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