Pacific Northern Gas (PNG) shareholders are receiving a bonus dividend arising from selling its half-interest in a planned pipeline for $50 million.
The $3 per common share is half, or $11 million, of the net proceeds of a first payment of $30 million made by Apache and EOG Resources which already own the other half of the planned Pacific Trails Pipeline.
The pipeline is to carry northeastern gas owned by the two companies to a liquefied natural gas plant near Kitimat which they also own.
PNG announced the sale last month and the $30 million was paid March 2.
The final $20 million is to be paid when the pipeline/gas plant project is announced and that’s expected to happen later this year.
The bonus dividend is to be paid at the same time as a regular dividend of 30 cents per common share for the last quarter of 2010.
PNG also announced net income for the fourth quarter of 2010 was $4 million, up 16 per cent from $3.4 million in 2009.
Company chief executive officer Roy Dyce did note that demand for natural gas fell in part because of the closure of West Fraser’s Eurocan pulp and paper mill.
“But with new investment in mines, metal production and related infrastructure, as well as proposed LNG projects, natural gas demand in our service area is expected to recover,” he said.
PNG’s northwestern customers have been going through several years of double-digit price increases because they’ve had to shoulder more of the burden of maintaining its system because it has lost so many large industrial users.
Those increases have more than swallowed any reductions in the price of the commodity itself.
But although PNG has sold its half-interest in the Pacific Trails Pipeline, it does have a long-term contract to operate and maintain the pipeline, providing revenue it says will help decrease those higher costs now being borne by its other customers.
PNG is receiving option payments on another proposal to transport gas through its existing system. If that contract is ever exercised, the company says the revenue will also help reduce costs to its other customers.