Independent energy company Matador Resources has signed an agreement to divest midstream assets in the Delaware Basin in Texas, US, to a subsidiary of EnLink Midstream Partners for $143m.
Under the terms of the deal, Matador will sell its subsidiary which owns certain natural gas gathering and processing assets including a cryogenic natural gas processing plant and high-pressure gathering pipeline which connects a Matador-owned gathering system to the processing plant.
Commissioned recently, the processing plant has capacity to process about 19 million cubic feet of natural gas per day. It has approximately 35 million cubic feet per day of inlet capacity.
Matador will offer its current leasehold interests in Loving County under a 15-year, fixed-fee gathering and processing agreement in addition to having an option to defer taxes related to the assets sale through potential exchange transactions.
Matador chairman and CEO Joseph Foran said: "The agreement further solidifies our already strong balance sheet and will provide us with over $500 million in liquidity at closing including nothing drawn on our revolving credit facility.
"When we kicked off our midstream initiatives in our Wolf prospect area in Loving County last year, our primary goals were to generate significant value for our shareholders and ensure adequate firm takeaway capacity for our production."
The assets are expected to strengthen EnLink’s crude oil gathering, transportation and marketing services in the Delaware Basin region.
EnLink Midstream president and CEO Barry Davis said: "These assets are located in a highly-attractive part of the Delaware Basin, providing us with an immediate foothold in the region.
"The Delaware Basin and the entire Permian region will be a significant area for future growth."
The transaction is subject to regulatory approvals and will be closed in the fourth quarter of this year.
Over the next 18 months, EnLink plans to invest up to $500m to strengthen its position in the Delaware Basin by developing additional gathering pipelines in Loving and Reeves Counties, Texas and Eddy and Lea Counties, New Mexico, US.
Image: EnLink intends to strength its crude oil gathering, transportation and marketing services in the Delaware Basin region. Photo: courtesy of supakitmod/ FreeDigitalPhotos.net.