CALGARY, Alberta (Reuters) - Canadian mid-size oil producer Paramount Resources Ltd POU.TO agreed on Thursday to sell a natural gas processing complex in the Montney shale formation in Alberta to Pembina Pipeline Corp PPL.TO for C$556 million ($428.45 million) in cash.
Paramount, founded by billionaire Calgary oilman Clay Riddell, will also receive a $35 million capital commitment for a planned enhancement program at the Musreau sour gas processing complex.
The complex includes gathering pipelines, a refrigeration plant, future disposal wells and surface rights for the future construction of another gas processing facility nearby.
The Paramount divestiture is the latest example of struggling oil and gas producers selling off midstream asset in a bid to survive the 18-month global crude price rout.
“This is a transformational, strategic transaction for Paramount as we unlock the value of our midstream assets,” said Paramount Chief Executive Officer Jim Riddell.
The sale is expected to close in the second quarter of 2016 and Paramount plans to use the proceeds to pay down debt.
Reporting by Nia Williams; Editing by David Gregorio