(TSX: AAV)
CALGARY, AB,
March 28, 2022 /CNW/ -
Entropy Inc. ("Entropy" or the "Corporation"), a subsidiary of
Advantage Energy Ltd. ("Advantage"), is pleased to announce a
strategic $300 million investment
agreement with Brookfield Renewable to scale up deployment of
Entropy's carbon capture and storage ("CCS") technology
globally.
Highlights of the Strategic Investment Agreement
The investment provides Entropy with a combination of strategic
advantages:
- Capital commitment of $300
million to fund Entropy's near-term projects, including its
Glacier Phase 1 and 2 CCS projects
- Potential for significant follow-on capital on mutually
agreeable terms
- Access to a large-scale international portfolio; increasing
Entropy's already considerable pipeline of potential CCS
projects
- Enhanced capacity for global commercial, marketing and policy
relationships
- Underscores mutual confidence in Entropy's sophisticated CCS
technology and global development strategy
"We are excited to be receiving substantial backing from
Brookfield Renewable, who share our strategic approach to carbon
abatement," said Michael Belenkie,
President and CEO of Advantage. "In order to have a
meaningful impact on a global scale, we must invest in the highest
efficiency projects with advanced technology, at scale.
Entropy has a strong pipeline of these projects under development
and owns the full suite of next-generation CCS technology.
Combining Brookfield's financial power and international presence
is a key step to achieving global scale. With the growing
need to balance carbon abatement with world-wide energy security,
CCS needs to play a leading role and Entropy intends to be an
important part of accelerating its deployment."
Deal Structure Overview
Brookfield Renewable will invest in a hybrid security that
implies a pre-money valuation of approximately $300 million, recognizing the significant value
created to date for existing shareholders. The committed
capital will be drawn down by Entropy to fund CCS projects that
reach final investment decision as certain predetermined return
thresholds are met. Technical, commercial, and financial due
diligence was carried out by Brookfield Renewable during the
process leading to its first-of-its-kind financing for a pure-play
CCS developer.
The flexible investment structure provides both Advantage and
Brookfield Renewable with liquidity options as the business
develops including the ability for Brookfield Renewable to convert
its investment into common shares at any time. Advantage
retains the ability to initiate an initial public offering of
Entropy or to distribute Entropy common shares to Advantage
shareholders.
Brookfield Strategic CCS Investment
Brookfield is pursuing this
investment through the Brookfield Global Transition Fund I
("BGTF"), which is the largest fund in the world focused on the
energy transition. BGTF targets investment opportunities that
will help companies decarbonize their operations. This
investment is expected to leverage Brookfield Renewable's global
reach and strong commercial and industrial relationships to
accelerate the deployment of Entropy's unique low-cost CCS solution
across a wide range of industrial applications.
"Countries and companies are in the midst of an unprecedented
transition as decarbonization is now firmly established as a
critical priority worldwide," said Jehangir
Vevaina, Chief Investment Officer of Brookfield Renewable.
"As a global leader in decarbonization, Brookfield Renewable
has delivered clean energy and transition solutions for more than
30 years. We are excited to invest into a leading CCS
business as we continue to expand the decarbonization solutions
that we provide to our partners".
Impact on Advantage
Brookfield Renewable's investment, together with the anticipated
CCS Investment Tax Credit (previously announced by the Government
of Canada to be enacted during
2022), will provide all anticipated near-term capital funding needs
with no additional capital required from Advantage to achieve
Entropy's growth plan. Advantage will continue to control
Entropy until substantially all of Brookfield Renewable's committed
capital has been invested, at which time Brookfield Renewable's
ownership would represent approximately 50% of Entropy, on an as
converted basis. Although Entropy's management team will
expand to provide increased capacity, Advantage will continue to
provide shared resources and executive oversight.
Advantage shareholders will recognize the benefit of the
collaboration via consolidated cash flow and income, a value
indicator established by a leading transition investor, and the
potential for future liquidity which could include a public
listing. Advantage's consolidated business will strengthen,
increasing shareholder value and providing further certainty on our
path to net-zero in 2025.
Business Development Update
Entropy has evolved rapidly since our introduction to the
markets in March 2021, and we are
pleased to provide an update on several notable elements of the
business.
With international carbon markets evolving rapidly, commercial
CCS projects are now feasible in many jurisdictions around the
world. However, in most cases, it is necessary to apply the
most sophisticated CCS technology to carefully selected
point-source emissions to achieve commercial returns that are
adequate to offset carbon pricing risk. Entropy has acquired
and developed numerous innovations that have driven CCS costs down
to the point where post-combustion projects (including capture,
transport and storage) are economically viable at carbon pricing of
USD$40/tonne.
Entropy continues to expand its project pipeline with signed
memorandums of understanding ("MOUs") now representing over 3
million tonnes per annum and approximately $1.5 billion of potential investment. These
totals do not include any new projects relating to the Brookfield collaboration, which Entropy
believes may be significant.
Entropy continues to advance work under its existing MOUs and
recently signed a Letter of Intent with Athabasca Oil Corporation
for the Leismer project. The Letter of Intent establishes a
commercial framework for the project and is the first Entropy
third-party project to achieve this milestone.
Entropy continues to receive significant inbound interest for
its modular carbon capture and storage ("MCCS") technology from
around the world.
Glacier Project Update
Entropy's Glacier Phase 1 MCCS continues to progress with plant
tie-ins occurring during the final week of March; on-stream date
remains planned for Q2/22 but has been delayed several weeks due to
supply chain issues with raw materials and select specialized
control systems. Total capital costs remain within
approximately 10% of original target ($27
million).
Looking Forward
Entropy is pleased to collaborate with Brookfield Renewable as
its CCS technology expands in both scale and global reach. In
the coming months, Entropy expects to advance towards final
investment decisions for several additional projects and will
continue to build new partnerships focused on global scale CCS
projects.
Entropy is excited about the future of our business in 2022 and
beyond with the tremendous engagement of third-party emitters, the
investment from Brookfield Renewable, and the growing global
support for commercial carbon capture and storage.
Advisors
TD Securities Inc., Scotia Capital Inc. and Desjardins
Securities Inc. acted as agents for Entropy on this placement.
For additional details regarding Entropy, an updated
corporate presentation is available at
www.entropyinc.com/investors/.
About Entropy Inc:
Entropy is a privately-owned company, founded by Advantage to apply
sophisticated science and engineering to commercialize CCS.
Entropy's technology is expected to deliver commercial
profitability at a carbon price of USD$40/tonne, using proprietary modular carbon
capture and storage technology. Entropy intends to deploy
this technology in the global effort to reduce and eventually
eliminate carbon emissions.
About Advantage Energy Ltd:
Advantage is a low-carbon energy producer focused on developing its
high-quality Montney resources.
Advantage's owned infrastructure, top-tier cost structure and
capital efficiency provide a strong foundation for sustainable,
disciplined production growth. With modern, low
emissions-intensity assets and the Glacier carbon capture and
sequestration asset, Advantage continues to proudly deliver clean,
reliable and sustainable energy, contributing to a reduction in
global emissions by displacing high-carbon fuels. Prior to
closing the subject investment agreement, Advantage owned 90% of
Entropy. Advantage's common shares trade on the Toronto Stock
Exchange under the symbol AAV with its head office in Calgary, Alberta, Canada. Further
information is available at www.advantageog.com.
About Brookfield Renewable:
Brookfield Renewable operates one of the world's largest publicly
traded, pure-play renewable power platforms. Our portfolio
consists of hydroelectric, wind, solar and storage facilities in
North America, South America, Europe and Asia, and totals approximately 21,000
megawatts of installed capacity and an approximately
62,000-megawatt development pipeline. Investors can access
our portfolio either through Brookfield Renewable Partners L.P.
(NYSE: BEP; TSX: BEP.UN), a Bermuda-based limited partnership, or
Brookfield Renewable Corporation (NYSE, TSX: BEPC), a Canadian
corporation. Further information is available at
www.bep.brookfield.com and www.bep.brookfield.com/bepc.
Important information may be disseminated exclusively via the
website; investors should consult the site to access this
information.
Brookfield Renewable is the flagship listed renewable power
company of Brookfield Asset Management, a leading global
alternative asset manager with approximately US$690 billion of assets under management.
Advisory
The information in this press release contains certain
forward-looking statements, including within the meaning of
applicable securities laws. These statements relate to future
events or our future intentions or performance. All statements
other than statements of historical fact may be forward-looking
statements. Forward-looking statements are often, but not always,
identified by the use of words such as "anticipate", "continue",
"demonstrate", "expect", "may", "can", "will", "believe", "would"
and similar expressions and include statements relating to, among
other things, the anticipated benefits to be derived from the
strategic investment agreement and Entropy's collaboration with
Brookfield; the anticipated use of
the proceeds derived from the strategic investment; the capital
commitment and the potential for significant follow-on capital to
Entropy and the anticipated terms and timing thereof; that the
strategic investment will provide Entropy with access to a
large-scale international portfolio; that Entropy will meet the
conditions to draw on the committed capital; the anticipated
benefits to be provided to Advantage and Brookfield from the flexible investment
structure of the strategic investment agreement; Entropy's
expectations that the strategic investment will accelerate the
deployment of Entropy's unique low-cost CCS solution across a wide
range of applications; that Brookfield Renewable will continue to
expand the decarbonization solutions that it provides to its
partners; the Government of Canada's anticipated CCS Investment Tax Credit
and the anticipated timing thereof and benefits to be derived
therefrom; that no additional capital will be required from
Advantage to achieve Entropy's growth plan; that Advantage will
continue to control Entropy until substantially all of the
Brookfield committed capital has
been invested; that Advantage will continue to provide shared
resources and executive oversight to Entropy; that Advantage's
shareholders will recognize the benefit of the collaboration with
Brookfield via consolidated cash
flow and income, a value indicator established by a leading
transition investor, and the potential for future liquidity which
could include a public listings; the anticipated benefits to be
derived from Entropy's MOUs and letters of intent and the
expectation that they will result in completed CCS projects; that
Entropy's CCS technology will make post-combustion projects
economically viable at carbon pricing of USD$40/tonne; the anticipated timing of the plant
tie-ins and the anticipated on-stream date for Entropy's Glacier
Phase 1 MCCS project and the anticipated costs in connection
therewith; Entropy's expectations that it will advance towards
final investment decisions for several additional projects and will
continue to build new partnerships focused on global scale CCS
projects; that Advantage's consolidated business will strengthen
and increase shareholder value; that Advantage will achieve "net
zero" emissions by 2025; and Entropy's focus, strategies and plans
for its technology. Advantage's and Entropy's actual decisions,
activities, results, performance or achievement could differ
materially from those expressed in, or implied by, such
forward-looking statements and accordingly, no assurances can be
given that any of the events anticipated by the forward-looking
statements will transpire or occur or, if any of them do, what
benefits that Advantage or Entropy will derive from them.
With respect to forward-looking statements contained in this
press release, Advantage and Entropy have made assumptions
regarding, but not limited to: that an increase in financial power
and international presence will allow Entropy to achieve global
scale; that Entropy's CCS projects will reach final investment
decision; that Entropy's existing MOUs and letters of intent will
lead to completed CCS projects; conditions in general economic and
financial markets; effects of regulation by governmental agencies;
current and future commodity prices and royalty regimes; future
exchange rates; royalty rates; future operating costs; availability
of skilled labor; the impact of increasing competition; that
Advantage and Entropy will have sufficient cash flow, working
capital, debt or equity sources or other financial resources
required to fund its capital and operating expenditures and
requirements as needed; that Entropy's conduct and results of
operations will be consistent with expectations; that Entropy will
have the ability to develop its technology in the manner currently
contemplated; current or, where applicable, proposed assumed
industry conditions, laws and regulations will continue in effect
or as anticipated; and the anticipated benefits and results from
Entropy's technology are accurate in all material respects. Readers
are cautioned that the foregoing lists of factors are not
exhaustive.
These statements involve substantial known and unknown risks
and uncertainties, certain of which are beyond Advantage's and
Entropy's control, including, but not limited to: the capital
commitment and the potential for significant follow-on capital to
Entropy may be less than anticipated; the flexible investment
structure of the strategic investment agreement may not provide the
anticipated benefits to Advantage or Brookfield; that Advantage's shareholders may
not recognize the benefit of Entropy's collaboration with
Brookfield; that the strategic
investment may not provide Entropy with access to a large-scale
international portfolio; that Entropy may not meet the conditions
to draw on the committed capital; that Brookfield's investment and the anticipated
CCS Investment Tax Credit may not provide all the capital funding
required in the near future; that Advantage may not continue to
control Entropy until substantially all the Brookfield capital has been invested; that
Advantage may not continue to provide shared resources and
executive oversight to Entropy; that Entropy's existing MOUs and
letters of intent may not result in completed CCS projects; that
Entropy's CCS technology may not make post-combustion projects
economically viable at carbon pricing of USD$40/tonne; that Advantage's consolidated
business may not strengthen or increase shareholder value; that
Advantage may not achieve "net zero" emissions by 2025; that
Entropy's Glacier Phase 1 MCCS project's operations may not begin
when anticipated; there may not be a significant pipeline of
projects available to Entropy; changes in general economic, market
and business conditions; industry conditions; actions by
governmental or regulatory authorities including increasing taxes
and changes in investment or other regulations; changes in tax laws
and incentive programs; changes in carbon tax and credit regimes;
competition from other producers; the lack of availability of
qualified personnel or management; intellectual property and patent
risks; credit risk; changes in laws and regulations including the
adoption of new environmental laws and regulations and changes in
how they are interpreted and enforced; ability to comply with
current and future environmental or other laws; stock market
volatility and market valuations; failure to achieve the
anticipated benefits and results of Entropy's technology; failure
to achieve the anticipated benefits of Entropy's relationships with
third parties; ability to obtain required approvals of regulatory
authorities; and ability to access sufficient capital from internal
and external sources.
Management has included the above summary of assumptions and
risks related to forward-looking information above in order to
provide shareholders with a more complete perspective on Entropy's
future operations and such information may not be appropriate for
other purposes. Entropy's actual results, performance or
achievement could differ materially from those expressed in, or
implied by, these forward-looking statements and, accordingly, no
assurance can be given that any of the events anticipated by the
forward-looking statements will transpire or occur, or if any of
them do so, what benefits that Advantage and Entropy will derive
there from. Readers are cautioned that the foregoing lists of
factors are not exhaustive. These forward-looking statements are
made as of the date of this news release and neither Advantage or
Entropy disclaims any intent or obligation to update publicly any
forward-looking statements, whether as a result of new information,
future events or results or otherwise, other than as required by
applicable securities laws.
SOURCE Advantage Energy Ltd.