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Veresen CEO Don L. Althoff. Image courtesy of Veresen/Youtube.

Veresen Midstream, a new midstream partnership between infrastructure player Veresen and investment firm Kohlberg Kravis Roberts & Co.(KKR), inked deals Tuesday with Encana and Cutbank Ridge Partnership worth a combined $5.6 billion.

Veresen Midstream will acquire gathering and compression infrastructure and ongoing construction projects from Encana and Cutbank Ridge Partnership (CRP) to support the Montney gas play development in British Colombia.

The Encana and CPR assets will be purchased for a combined cash consideration of $600 million plus actual costs accrued in 2015.

The newly acquired infrastructure is adjacent to Veresen’s Hythe/Steeprock assets.

CRP is a partnership between Encana and Cutbank Dawson Gas Resources, a subsidiary of Japan-based Mitsubishi Corporation.

Veresen Midstream also agreed to undertake up to $5 billion in new midstream expansion for Encana and CRP under a 30 year fee-for-service arrangement to support future production in the Montney play.

Alberta-based Veresen will fund its interest in Veresen Midstream by contributing its $920 million Hythe/Steeprock gathering and processing assets to the partnership.

In exchange for the contribution Veresen will receive $420 million from Veresen Midstream, resulting in a 50 percent equity position worth $500 million.

KKR will fund its 50 percent interest in Veresen Midstream by contributing $500 million in cash.

Veresen said Veresen Midstream will be its primary growth vehicle for its Canadian natural gas and natural gas liquids midstream business.