On Monday, Midcoast Energy Partners L.P. (NYSE: MEP) announced its new ventures into the Eaglebine shale play in East Texas through two key transactions totaling approximately $160 million.
According to a press release from Enbridge Energy Partners, the expansion on behalf of the corporation includes the construction of a new natural gas pipeline gathering header and the acquisition of various midstream assets.
Midcoast has executed agreements with Burk Royalty Co. LTD and SEM Operating Company LLC, a subsidiary of Sequitur Energy Resources LLC to construct, own and operate the Ghost Chili Lateral pipeline and associated facilities in Houston County, Texas. The company expects the facilities in Houston County to be in service by late-2015 and the Ghost Chili Lateral pipeline to come online by mid-2016.
In addition, Midcoast also sealed the purchase of a natural gas gathering system from New Gulf Resources LLC. Currently, the system’s operations move equity and third party production. It is based in the eastern Texas counties of Leon, Madison and Grimes.
“The combined transactions of the Ghost Chili Lateral and the new NGR acquisition enhance MEP’s competitive position in the Eaglebine and provide additional opportunities for accretive growth in MEP’s natural gas gathering, processing, and transportation business. We are also very pleased that the contracts associated with these investments are largely volume commitment-based, which is in line with our commitment to progress MEP toward contract structures with more certain cash flows,” said C. Gregory Harper, president of Midcoast Partners. “This marks another step forward as we execute on our strategic initiatives to geographically diversify our asset footprint, increase the Partnership’s demand-based revenues and drive low-risk growth in distributable cash flow to our unitholders.”