SandRidge Energy Inc. is planning to spin off a subsidiary to serve Midcontinent producers that need saltwater services for their oil and gas wells.
MidCon Midstream LP filed a Form S-1 with the U.S. Securities and Exchange Commission regarding the initial public offering. SandRidge recently formed the partnership to own, operate, acquire and develop assets used to gather, process and dispose of saltwater produced alongside oil and natural gas. The partnership would hold well connections, gathering pipelines and disposal wells to serve the Midcontinent region.
MidCon Midstream has capacity to process 1.2 million barrels of saltwater a day through 425 miles of pipeline. By the end of this year, SandRidge will have spent an estimated $600 million on the water network. It has been considering a different capital structure for the business.
The Mississippian Lime in Oklahoma and Kansas, where SandRidge is one of the biggest leaseholders, yields large amounts of saltwater with oil and natural gas (see Shale Daily, April 11; Dec. 4, 2012). In some parts of the play, the ratio of hydrocarbons to saltwater is as low as 1:10, and dealing with water has been considered an impediment to development.
The number of common units to be offered, and the price range for the offering, had not been determined, according to the filing. MidCon Midstream said it intended to apply for a listing of the common units on the New York Stock Exchange. SandRidge would own the general partner and initially would retain most of the units. Net proceeds would be distributed to SandRidge.
No timeline was offered for the IPO launch.