COP Casino Guichard Perrachon

TransCanada Corp. (TRP) will acquire ConocoPhillips' (COP) interest in the Keystone Pipeline System for about US$550 million plus the assumption of about US$200 million of short-term debt, thereby becoming the sole owner of the project.

The purchase price reflects ConocoPhillips' capital contributions to date and includes an allowance for funds used during construction, TransCanada said. It will also assume responsibility for ConocoPhillips' share of the capital investment required to complete the project, resulting in an incremental commitment of about US$1.7 billion through the end of 2012. The transaction is expected to close in the third quarter.

When completed, Keystone will be one of the largest oil-delivery systems in North America, with the capacity to deliver 1.1 million barrels a day. The first phase of Keystone, which will extend from Hardisty, Alta. to the U.S. Midwest, is under construction.

The total capital cost of Keystone is expected to be about US$12 billion. About US$2.7 billion has been spent with the remaining US$9.3 billion to be invested between now and the end of 2012.

TransCanada also said Tuesday that it will issue 50.8 million shares at C$31.50 each through a syndicate led by RBC Capital Markets. It will use the proceeds of about C$1.6 billion to fund capital projects, including the acquisition of the remainder of Keystone, for general corporate purposes and to repay short-term debt.

Toronto trading in TransCanada is halted; the stock last changed hands at C$33.06.

-Tara Zachariah; 416-306-2100; AskNewswires@dowjones.com