Howard Energy Partners To Acquire 185 Miles Of South Texas Pipeline From Meritage Midstream Services
Energy Partners (HEP) announced today that the company has entered
into definitive agreements to acquire substantially all of
Midstream Services’ natural gas gathering assets in South Texas.
Howard Energy Partners (HEP) announced today that the company has entered into definitive agreements to acquire substantially all of Meritage Midstream Services’ natural gas gathering assets in South Texas. HEP will acquire the Eagle Ford Escondido Gathering System, which is partially owned by Laredo Energy, and the Cuervo Creek Gathering System. Both systems are primarily 12-inch to 16-inch high pressure natural gas pipelines. The transaction is expected to close in April, subject to regulatory approvals and customary closing conditions. The acquisition will be funded primarily with equity investments in HEP by Crosstex Energy, L.P. (NASDAQ: XTEX), Quanta Services, Inc. (NYSE: PWR), GE Energy Financial Services, a division of General Electric (NYSE: GE), and Clear Springs Energy Company LLC. After closing of the acquisition and including initial investments, Crosstex and Quanta will have contributed an aggregate of $87.25 million each to HEP. These two companies, along with GE Energy Financial Services, upon the closing of the acquisition, will each own 30.6 percent of the outstanding units in HEP. The two systems, located in Webb County, Texas, consist of a newly constructed rich natural gas gathering system with approximately 83 miles of pipeline, a 102-mile lean natural gas gathering system, two leased amine treating plants, and multiple intrastate pipeline outlets for regional processing and transportation. The systems are supported by multiple long-term fee based agreements with more than 180,000 dedicated acres and more than 200 billion cubic feet of total volume commitments. The lean and rich gas pipelines have a combined capacity of 400 million cubic feet of natural gas per day (MMcf/d), of which 80 percent of the firm capacity is under contract. HEP expects to expand the systems in the near term to meet increased demand for natural gas gathering from multiple geologic formations including the Escondido, Olmos, San Miguel, Austin Chalk and Eagle Ford Shale.