The assets to be sold include 72 miles (115km) of dry gas gathering pipelines and nine compressor stations, with a compression capacity of around 700 million cubic feet per day, located in Doddridge County and Harrison County, West Virginia
Crestwood to divest Marcellus assets. (Credit: Tasos Mansour on Unsplash)
Crestwood Equity Partners has agreed to sell its Marcellus Shale gas gathering and compression assets to Antero Midstream for a total of consideration $205m in cash.
The assets to be sold include 72 miles (115km) of dry gas gathering pipelines and nine compressor stations, with a compression capacity of around 700 million cubic feet per day.
They are located in Doddridge County and Harrison County, West Virginia,
Crestwood said that the divestiture is part of its long-term growth strategy to offload non-core assets in the Williston, Delaware, and Power River basins.
The company intends to use the proceeds from the sale to enhance financial flexibility, by reducing debt and opportunistic repurchase of common units.
The acquisition is expected to close in the fourth quarter of this year, subject to certain customary regulatory approvals, including regulatory approvals.
Crestwood Equity Partners founder, chairman, and CEO Robert G Phillips said: “Over the past ten years, our employees in the Marcellus Shale have done an incredible job to build and operate a premier natural gas gathering and compression system, safely and sustainably.
“Many of Crestwood’s peer-group leading operational practices were developed in the Marcellus and form the basis of the best-in-class operations program across our midstream G&P portfolio.”
Antero Midstream intends to fund the transaction through borrowings under a revolving credit facility.
The company expects the acquisition to add around 425 undeveloped drilling locations and 120,000 gross dedicated acres from Antero Resources.
In addition, the acquisition is anticipated to increase its compression capacity by 20% and gathering pipeline mileage by 15%.
Locke Lord served as legal advisor to Crestwood, while Vinson & Elkins served as legal advisor to Antero Midstream, on the transaction.
Antero Midstream chairman and CEO Paul Rady said: “Today’s bolt-on acquisition provides significant synergies that drive attractive economics and immediate Free Cash Flow accretion to Antero Midstream.
“The acquisition is consistent with Antero Midstream’s strategy of investing in infrastructure in the Marcellus, the lowest cost shale play, for high visibility customers, particularly Antero Resources.
“Importantly, the assets include underutilised gathering and compression capacity for capital efficient development from both Antero Resources and other third parties.”