Building on a letter of intent they signed in October, Rice Energy Inc. and Gulfport Energy Corp. have completed their midstream joint venture (JV), which would support Gulfport's dry natural gas production in Ohio's Belmont and Monroe Counties.
In a U.S. Securities and Exchange Commission (SEC) filing this month, Rice said the companies have entered into a limited liability company agreement to form the joint venture. Under the agreement, Strike Force Midstream LLC has been established to gather natural gas in the area of mutual interest (AMI) for delivery to interstate pipelines. Rice would own 75% of Strike Force and Gulfport would own the rest.
As part of the deal, Rice contributed $41 million in cash, certain pipelines, facilities and rights of way to Strike Force. Gulfport contributed a natural gas gathering system and related assets. Rice and Gulfport would continue to make contributions to the subsidiary according to their proportionate ownership interests.
Rice will be the operator of Strike Force and contribute all employees and services necessary for the daily operation and management of the subsidiary's assets. The companies said in October that they would invest $520 million in gas gathering and another $120 million in water systems (see Shale Daily, Oct. 8, 2015).
Plans call for constructing a 1.8 million Dth/d dry gas gathering system with interconnects to interstate pipelines such as Rockies Express and Texas Eastern Transmission, among others. Earlier this month, Gulfport said construction of the JV's assets is underway and added that Rice has completed the first phase of the projects with a lateral that connects two existing dry gas gathering systems.
According to the SEC filing, Strike Force management would consist of three members designated by Rice and another two members designated by Gulfport who would oversee annual budgets, acquisitions and new projects. Under the agreement, neither party can transfer its interests in Strike Force until after Aug. 1, 2017.
For years now, Rice and Gulfport have been drilling partners within an AMI of Ohio's Utica. When they announced the JV, the companies said they plan to pursue third-party dry gas gathering and water services opportunities in the area.