Paramount Resources Ltd. entered into an agreement for the sale of its Musreau complex and related midstream assets for more than CA$600 million with a wholly-owned subsidiary of Pembina Pipeline Corp., the company said March 17.

The 50 million cubic feet per day (MMcf/d) refrigeration plant, the 200 MMcf/d Deep Cut plant, the 22,500 bbl/d condensate stabilizer and the amine facility are being offered. The gas sales pipeline connecting the Musreau complex to the TCPL meter station, and most of Paramount’s larger-diameter gathering system, are also being offered, as are the site and engineering and design work for the future 6-18 gas processing plant.

Paramount will receive CA$556 million in cash at closing, plus a CA$35 million capital commitment for a Musreau enhancement program scheduled for completion this year.

The companies entered a midstream service agreement (MSA) that includes a 20-year arrangement providing Paramount priority access to Musreau’s sold capacity.

Paramount will pay a fixed fee per million cubic feet of raw gas plus operating expenses. This will cover processing, condensate stabilization, use of the gathering system and transportation of sales gas from the complex to the TCPL meter station.

Proceeds from the sale will pay down Paramount’s bank credit facility. On Feb. 29, Paramount had $668.4 million drawn on the facility, and plans to reduce the $900 million Tranche A to $600 million, down $300. Paramount also will cancel the $100 million undrawn Tranche B.

The transaction is scheduled to close in second-quarter 2016, subject to regulatory approvals.

Pembina will utilize existing transportation arrangements to match Paramount’s anticipated production growth.

Paramount secured the right to have Pembina build and provide up to 200 MMcf/d of gas processing capacity at the 6-18 Plant site.

Jim Riddell, president and CEO, said Paramount’s future midstream funding requirement for growth was eliminated through the transaction.

RBC Capital Markets is financial adviser for Calgary, Alberta-based Paramount Resources Ltd.