Investing.com -- Canadian Natural Resources Ltd (TSX:CNQ) has reached a settlement with Canada’s Competition Bureau to resolve competition concerns tied to its acquisition of Schlumberger’s stake in a joint natural gas venture. The agreement centers around Canadian Natural’s purchase of SLB’s 87.5% interest in a portfolio of 16 natural gas processing plants in southeastern Alberta.
Regulators raised red flags around market dominance posed by the deal, especially around three facilities near Calgary: Seiu Lake, Wintering Hills, and Wayne Dalum. According to the Competition Bureau, the acquisition would likely lead to significant market concentration that could reduce choices and drive up prices for natural gas producers in that area.
To remedy these issues, Canadian Natural agreed to divest 75% of its ownership in the Seiu Lake facility to North 40 Resources Inc., an independent energy company active in the region. Canadian Natural will retain a 25% non-operating stake while North 40 takes over as operator of the plant.
The Bureau said this move would protect competition by ensuring natural gas producers continue to have at least two viable options for processing in the region. The Seiu Lake divestment was viewed as essential to preserving market dynamics after the consolidation of SLB’s assets.
Canadian Natural is one of Canada’s largest oil and gas companies, with operations that span North America and international markets. The company has increasingly focused on consolidating its foothold in Alberta’s natural gas infrastructure.
North 40 Resources, based in Alberta, produces oil and gas across the southeastern part of the province, including areas surrounding the Seiu Lake facility. Its takeover of operations there adds to its regional infrastructure portfolio.
With this resolution, Canadian Natural can move forward with the rest of the SLB asset acquisition. The Competition Bureau’s involvement underscores the growing attention on midstream assets and the potential competitive impacts of their ownership. Canadian Natural’s stock is down less than 1% following the news, as the investors weigh the positives of the deal with the negatives of the divestiture.