Noah Zivitz Managing Editor, BNN Bloomberg Follow|Archive

Inter Pipeline (IPL.TO) is acquiring full ownership of the Cold Lake pipeline system. The Calgary-based pipeline operator announced on Monday it will pay Canadian Natural Resources (CNQ.TO) $350 million in cash and $177.5 million in stock (6.4 million shares) for its 15 per cent stake in the pipeline.

"Inter Pipeline's purchase of the remaining interest in the Cold Lake pipeline system is a highly logical and immediately accretive investment on a funds from operations basis," said Christian Bayle, Inter Pipeline's president and chief executive officer, in a press release.

Inter Pipeline also announced on Monday that it will build a $125-million pipeline connection to Canadian Natural's Kirby North project. The new pipeline will transport diluent and bitumen blend, with service expected to start in 2020. Bayle said the connection "secures a material oil sands transportation contract during a challenging time for the energy industry."

"While it is unusual for CNQ to sell mid-stream assets, its interest in the Cold Lake Pipeline was non-core, while egress for Kirby North has been preserved," Royal Bank of Canada analyst Greg Pardy wrote in a note Monday.

Canadian Natural Resource shares were up 1.34 per cent at $44.56 on the Toronto Stock Exchange as of 2:30 p.m. ET.