Further cementing its transformation from producer to midstreamer, Sanchez Midstream Partners LP (SMP) said Wednesday it has reached an agreement to sell certain non-core, non-operated production assets in Texas to an undisclosed private buyer for $6.3 million.
The move comes after the Houston-based master limited partnership -- changing its name from Sanchez Production Partners LP -- divested its remaining Oklahoma production assets for $5.5 million.
Management said the latest asset sale in Texas allows SMP to focus on midstream activities in the western part of the Eagle Ford Shale in South Texas.
Both the Texas and Oklahoma asset sales are expected to close in the third quarter, the partnership said.
"The sale of non-core production assets expected this quarter comes as we continue to advance our midstream strategy in South Texas," Gerry Willinger, CEO of SMP’s general partner, said.
"In keeping with that strategy, we are pleased to report that the Raptor Gas Processing Facility, a 50% joint venture with Targa Resources Corp., successfully completed testing and start-up in June and is now fully operational."
Willinger said the Raptor facility -- receiving gas from the Carnero Gathering Pipeline since June -- is currently capable of processing 200 MMcfe/d, with plans to expand to 260 MMcfe/d by the end of 3Q2017.
The partnership's wholly-owned Raptor SECO Pipeline Phase 1 is nearly complete and will allow the Raptor facility to access natural gas markets in South Texas when it comes online, anticipated later this month, he said.
"These assets are expected to provide a stable stream of fee-based cash flow beginning in the third quarter 2017 and are key components of our growth strategy in South Texas," Willinger said.