$44 Million Midstream Deal
Sanchez Production Partners has announced their intention to purchase Eagle Ford midstream assets.
Related: Natural Gas Will be a Boom for Eagle Ford Companies
Sanchez Production Partners (SPP) has initiated a transaction with Sanchez Energy to acquire 50% interest in Carnero Gathering, LLC. The company expects that the $44 million deal will increase their midstream revenue and adjusted EBITDA to approximately $7 million.
The Carnero Gathering System will ultimately connect45 miles of high pressure natural gas gathering pipelines from the Western Catarina Midstream system to a new plant in La Salle County.
“The Catarina asset is core to Sanchez Energy’s asset base and plans for future development. Since acquiring the asset in 2014, Sanchez Energy has reported strong results from its drilling program at Catarina, where the company has identified between 1,200 and 1,300 net drilling locations. We look forward to capitalizing on opportunities to grow alongside this leading Eagle Ford operator over time.”
Other details include:
- An initial payment of approximately $37 million in cash
- Sanchez Energy will assume remaining capital commitments of approximately $7.4 million
- SPP has amended its $500 million credit facility to stipulate conditions for investments in joint ventures
- The processing plant is expected to be operational in early 2017