Secure contracts cut VSN’s risk

Article Excerpt

VERESEN $11.60 (Toronto symbol VSN; Shares outstanding: 292.0 million; Market cap: $3.2 billion; TSINetwork Rating: Average; Dividend yield: 8.6%; www.vereseninc.com) and KKR & Co. LP (symbol KKR on New York) formed a joint venture in late 2014 called Veresen Midstream. The partners then bought natural gas gathering and compression assets in northeastern B.C. from Encana and Japan’s Mitsubishi Corp. for $1 billion. As well, Veresen Midstream agreed to undertake a $5-billion expansion for gas producers, including Encana. This development would be backed by 30-year contracts that would significantly cut Veresen Midstream’s risk. The partners recently reached agreement with Encana and Mitsubishi for the first project: the Sunrise gas-processing plant, an $860-million facility in northeastern B.C. Construction has now started, and completion is scheduled for mid-2017. Veresen is still a buy. buy…