Mr. Don Althoff reports

VERESEN ANNOUNCES US$1.425 BILLION ACQUISITION OF 50% INTEREST IN THE RUBY PIPELINE AND ACQUISITION FINANCING

Veresen Inc. has entered into an agreement with Global Infrastructure Partners (GIP) to acquire GIP's 50-per-cent convertible preferred interest in the Ruby pipeline system for $1,425-million (U.S.). The acquisition will be made through a wholly owned subsidiary of Veresen.

Ruby is a newly built, large-scale natural gas transmission system delivering U.S. Rockies natural gas production to markets in the Western United States. The 680-mile, 42-inch pipeline has a current capacity of approximately 1.5 billion cubic feet per day, with expansion potential to two billion cubic feet per day through the addition of compression. Ruby originates at the Opal hub in Wyoming and extends to the Malin hub in Oregon. The Malin hub is the main interconnect to the proposed Pacific Connector gas pipeline (50 per cent owned by Veresen), which would supply Veresen's proposed Jordan Cove liquefied natural gas terminal.

El Paso Pipeline Partners, an affiliate of Kinder Morgan Inc., holds the remaining 50-per-cent ownership interest in Ruby through a common equity interest. Kinder Morgan, North America's largest natural gas pipeline operator, will continue to operate Ruby on a day-to-day basis.

"This is a rare opportunity to acquire a large interest in a core U.S. pipeline asset. Ruby is an ideal fit for Veresen because it offers immediate long-term contracted cash flows with downside protection through the preferred interest structure and provides significant future-added upside related to our Jordan Cove LNG project," commented Don Althoff, president and chief executive officer of Veresen. "This transaction is consistent with Veresen's growth strategy, where we are focused on leveraging our existing footprint, adding assets with further growth potential and providing natural gas connectivity from competitive supply regions to high-value markets.

"Concurrent with this transaction, we are pleased to announce that we have entered into an $800-million bought-deal subscription receipt financing which, together with our access to sources of credit as a result of our strong balance sheet, will successfully fund this acquisition."

This transaction is expected to close in the fourth quarter of 2014 and is subject to customary closing conditions and the receipt of approval by the Committee on Foreign Investment in the United States.

Highlights of strategic acquisition

Key investment highlights of the Ruby acquisition are as follows:

Long-term contracted asset supporting stable cash flow

• High-quality, long-term ship-or-pay contracts for approximately 1.1 billion cubic feet per day, representing 71 per cent of total current capacity, provide stable base cash flows;
• Strong mix of investment-grade shippers;
• Weighted average remaining contract term of approximately nine years;
• Enhances Veresen's portfolio of contracted pipeline assets providing diversification into a high-value market in the United States.

Strong and growing financial performance and impact

• Veresen will receive $91-million (U.S.) of preferred distributions annually based on the preferred interest structure (as described below);
• Immediately accretive to distributable cash per share;
• Limited maintenance capital and a low-cost structure enhance free cash flow;
• Significant future cash flow growth potential upon conversion to common equity following additional contracting and/or deleveraging;
• Estimated aftertax return on equity in the low teens based on current toll structure and expected volumes.

Synergistic to Veresen's Jordan Cove LNG project

• Ruby provides direct access to the U.S. West Coast through the proposed Pacific Connector gas pipeline which would supply the proposed Jordan Cove LNG terminal;
• Provides significant future upside associated with Jordan Cove LNG.

Attractive convertible preferred structure

• Preferred interest structure provides strong downside protection while preserving upside.
• Preferred distributions are payable prior to any distributions on the common interest, with any unpaid preferred distribution compounding at an annual return until paid.
• Contractual debt amortization will substantially delever Ruby over the initial shipper contract term while Veresen earns its preferred distribution.
• 50/50 joint control governance provides alignment of interests with experienced operating partner.
• Preferred interest can convert to a 50-per-cent common equity interest in Ruby at Veresen's option, providing the opportunity to participate in cash flow growth.
• Contracting of an incremental approximately 250 million cubic feet per day of long-term firm capacity at rates generally consistent with current contracts activates an automatic conversion of the preferred interest to common equity.

Significant opportunity for additional long-term contracting and expansion

• Opportunity to participate in significant potential cash flow growth from contracting the remaining 29 per cent of capacity;
• Average capacity of approximately 1.5 billion cubic feet per day is expandable to two billion cubic feet per day through the addition of compression;
• Attractive market dynamics in higher-growth areas, including California, Oregon, Washington and northern Nevada;
• Ruby provides Western U.S. natural gas consumers with critical supply diversity;
• Shifting market dynamics, including the potential development of U.S. West Coast LNG, support Ruby's continued and growing long-term utilization.

Guidance for 2014

Given the anticipated fourth quarter closing of the Ruby acquisition, Veresen's guidance for 2014 remains unchanged from guidance issued on Aug. 6, 2014, with distributable cash to be in the range of $1.02 to $1.20 per common share and a midpoint of $1.11 per common share. Further details regarding Veresen's 2014 guidance can be found at the company's website.

Acquisition financing

Financing for the Ruby acquisition is expected to be provided from a combination of equity and debt, specifically: the proceeds from an approximate $800-million equity offering pursuant to which subscription receipts will be issued; $750-million from new credit facilities; and the balance from Veresen's existing revolving credit facility. Veresen intends to refinance the acquisition-related borrowings over the course of the next 12 months through various capital market instruments, as well as with continuing proceeds received from equity issued in connection with Veresen's premium dividend and dividend reinvestment plan.

Subscription receipt offering

Veresen has agreed to sell, on a bought-deal basis, an aggregate of 48.8 million subscription receipts at a price of $16.40 per subscription receipt for gross proceeds of approximately $800-million. The subscription receipts will be offered through a syndicate of underwriters led by Scotiabank as bookrunner, and co-led by CIBC World Markets Inc. and TD Securities Inc., under Veresen's short-form base-shelf prospectus dated Sept. 20, 2013, and a prospectus supplement to such short-form base-shelf prospectus to be filed on or before Sept. 24, 2014. Veresen has also granted the underwriters an option to purchase up to an additional 7.32 million subscription receipts at a price of $16.40 per subscription receipt to cover overallotments, if any, which option is exercisable in whole or part for a period of 30 days following the closing of the offering. If the Ruby acquisition closes prior to the exercise of the overallotment option, the overallotment option will be exercisable in respect of an equivalent number of common shares. If the overallotment option is exercised in full, the total gross proceeds from the offering and the exercise of the overallotment option will be approximately $920-million. The additional gross proceeds received pursuant to the exercise of the overallotment option will be used to reduce Veresen's anticipated draw under its credit facilities to finance the Ruby acquisition.

Each subscription receipt will entitle the holder thereof to receive, concurrent with closing of the Ruby acquisition and upon satisfaction of certain escrow release conditions, one common share of Veresen plus an amount equal to the dividends Veresen declares on the common shares, if any, for record dates which occur during the period from the closing date of the offering to the date immediately preceding the date that common shares are issued on the exchange of the subscription receipts, net of any applicable withholding taxes.

The proceeds from the sale of the subscription receipts will be held by an escrow agent pending, among other things, receipt of all regulatory and government approvals required to finalize the Ruby acquisition, and fulfilment or waiver of all other outstanding conditions precedent to closing the acquisition. In the event the Ruby acquisition does not close prior to 5 p.m. ET on Jan. 30, 2015, or if the agreement with respect to the Ruby acquisition is terminated prior to such time, the holders of the subscription receipts will be entitled to receive an amount equal to the full subscription price thereof plus their pro rata share of the interest earned on such amount, net of any applicable withholdings taxes.

The offering is expected to close on or about Oct. 1, 2014, subject to customary closing conditions and the receipt of all necessary regulatory approvals.

New credit facilities

In connection with the Ruby acquisition, Veresen has obtained an underwritten commitment from Bank of Nova Scotia to provide new credit facilities in an aggregate amount of $1.5-billion, which will rank equally with Veresen's senior unsecured obligations and will be subject to mandatory reductions from the net proceeds of certain debt and equity issuances, and asset dispositions. A portion of the commitment under the new credit facilities will be cancelled upon deposit of the proceeds from the subscription receipt offering into escrow. Subject to the satisfaction of certain conditions precedent customary for a financing of this type, funds will be available by way of a single draw on the closing of the acquisition. The new credit facilities will contain terms that are customary for bank credit facilities of this nature.

Premium dividend and dividend reinvestment plan

Eligible shareholders will be permitted to continue to participate in the dividend reinvestment component of the plan, which entitles such shareholders to reinvest their dividends in common shares issued from treasury and to have such common shares credited to their account. Commencing with the cash dividend payable to shareholders of record on Oct. 31, 2014, Veresen intends to permit eligible shareholders to participate in the premium dividend component of the plan which will entitle such shareholders to reinvest their dividends in common shares issued from treasury and to have such common shares exchanged for a premium cash payment equal to 102 per cent of the cash dividend that such shareholders would otherwise be entitled to receive on the applicable dividend payment date.

Registered shareholders of Veresen that have not previously enrolled in the plan and that wish to enroll in the plan with respect to the cash dividend payable to shareholders of record on Oct. 31, 2014, and future cash dividends declared by Veresen, must deliver to Computershare Trust Company of Canada, as plan agent, a completed enrolment form which is available at Computershare's website at or before 5 p.m. ET on Oct. 24, 2014. A copy of the enrolment form may also be obtained by calling Computershare at 1-800-564-6253 or from Veresen's website.

Beneficial shareholders of Veresen that have not previously enrolled in the plan and that wish to participate in the plan with respect to the cash dividend payable to shareholders of record on Oct. 31, 2014, and future cash dividends declared by Veresen, should contact their broker, investment dealer, financial institution or other nominee to provide appropriate enrolment instructions and to ensure any deadlines or other requirements that such nominee may impose or be subject to are met.

Conference call advisory

Veresen will host a conference call and webcast to discuss the Ruby acquisition today at 2:30 p.m. MT (4:30 p.m. ET). A presentation will be available prior to the conference call at the company's website or SEDAR.

Dial-in:  1-888-231-8191 or 1-647-427-7450

Conference ID:  8918150

Webcast:  A live webcast of the call can be accessed on Veresen's website

A replay of the call will be available from 4:30 p.m. MT (6:30 p.m. ET) on Sept. 22, 2014, by dialling 1-855-859-2056 and 1-416-849-0833. The passcode is 8918150, followed by the pound sign. The replay will expire at 12 a.m. ET on Sept. 29, 2014. The webcast will be archived for one year.

Advisers

CIBC World Markets Inc. and Scotiabank acted as financial advisers to Veresen with respect to this transaction.

We seek Safe Harbor.