Two of the key drilling companies in eastern Ohio have formed a new joint venture in the Utica Shale.
Oklahoma-based Gulfport Energy Corp. and a subsidiary of Pennsylvania-based Rice Energy Inc. have agreed to develop natural gas-gathering pipelines and water services to support Gulfport’s drilling for natural gas in eastern Belmont and Monroe counties.
Gulfport and Rice announced Thursday that they plan to invest approximately $520 million to develop gathering and compression assets and $120 million for water assets over the next six years.
Each partner will fund its proportionate share of the total capital investments. Initial construction of the system is expected to begin immediately and first deliveries are planned for the middle of 2016.
Gulfport will own 25 percent of the joint venture. Rice will own the remaining 75 percent.
The joint venture will be supported by long-term, fee-based service agreements with Gulfport.
Rice will be responsible for constructing and operating the joint venture’s assets. That includes 165 miles of natural gas pipelines, 50,000 horsepower of compression to deliver natural gas to nearby interstate pipelines and a water system to provide water for hydraulic fracturing or fracking.
Gulfport will dedicate about 77,000 acres to the joint venture. That includes recent acquisitions from Paloma Partners III LLCF and American Energy-Utica LLC.
In addition, Gulfport will also contribute to the venture an existing 11-mile gas-gathering pipeline and an existing connection to an interstate pipeline, both of which are in Monroe County.
Gulfport will have the right to participate on a proportionate basis or “tag-along” in any direct or indirect sale transactions by Rice, which includes potential drop-down transactions with Rice Midstream Partners LP.
Said Michael G. Moore, Gulfport’s chief executive officer and president, “Gulfport has a strong history with Rice in the Utica Shale and we are excited to expand our relationship by creating further alignment with one of our midstream providers. In addition, the JV will enable Gulfport to leverage Rice’s expertise as a midstream services provider and participate in the midstream value chain through accretive opportunities with clearly defined tag-along rights that will allow Gulfport to take part in the potential drop-down strategies for the joint venture and its investments.”
This article was written by BOB DOWNING from The Akron Beacon Journal and was legally licensed through the NewsCred publisher network.