The Crosstex Energy companies, Crosstex Energy, L.P. (NASDAQ:XTEX) (the Partnership) and Crosstex Energy, Inc. (NASDAQ:XTXI) (the Corporation), today announced that the Corporation has joined with the former management of Enerven Compression Services to form a new company (E2) that will provide services for producers in the liquids-rich window of the Utica Shale play. The initial investment of approximately $50 million will include new natural gas compression and condensate stabilization facilities. This investment will complement the Partnership’s assets in the Ohio River Valley, which encompass crude oil, condensate and logistics operations in the Utica and Marcellus Shale plays.
E2 will build, own and operate two gas gathering compressor stations and condensate stabilization assets in Noble and Monroe counties in the southern portion of the Utica Shale play in Ohio. The counties are located immediately east of the Partnership’s assets in the Ohio River Valley. These initial facilities are supported by a long-term, fee-based contract with an active producer. E2 will serve as the manager and operator of these assets with expected commercial operations to start up during the third quarter of 2013.
The investment in E2 will be made by the Corporation, which owns the Partnership’s General Partner. A wholly-owned subsidiary of the Corporation has entered into a $75 million senior secured credit facility in order to provide the financing for the Corporation’s investment in E2. The Corporation will own approximately 93 percent of E2 and has pre-determined rights to purchase the remaining ownership interests of E2 in the future.
“Our investment in E2 is a strategic step in growing our platform in the Ohio River Valley. Utilizing the Corporation for this investment provides an additional source of capital for growth,” said Barry E. Davis, Crosstex President and Chief Executive Officer. “We are pleased to begin our partnership with the E2 management and expect this to be the first of many similar transactions with them as we expand our footprint in the Utica and Marcellus regions. Crosstex’s entrance into condensate stabilization is another step in realizing our long-term vision for offering additional condensate solutions in the Utica. We will continue to leverage our condensate expertise and trucking business to ensure our customers receive the highest possible value for their condensate product,” Davis added.