Shale Daily / NGI All News Access

CenterPoint Builds Texas Midstream Business in Two Deals

A CenterPoint Energy Inc. subsidiary on Tuesday bulked up its East Texas and Northwest Louisiana natural gas gathering and processing business after completing two agreements worth a total of $364 million.

In the first transaction, estimated at $275 million, CenterPoint Energy Field Services LLC (CEFS) took full ownership of Waskom Gas Processing Co. in which it already held a 50% stake. CEFS bought the interest from Martin Midstream Partners LP (MMLP) subsidiary Prism Gas Systems I LP.

"We have seen a significant increase in producer activity due to the improved economics of producing liquids-rich natural gas in the Cotton Valley field as well as other nearby formations," said CEFS Chief Commercial Officer Bill May. "Waskom provides a competitive outlet for natural gas liquids, including ethane, as well as several takeaway options for natural gas including our CenterPoint Energy Gas Transmission pipeline and direct access to our Perryville Hub."

Waskom has a 320 MMcf/d gas processing facility, a 14,500 b/d fractionation plant, as well as the Harrison system, which gathers 75 MMcf/d. In addition, CEFS bought Prism's 30 MMcf/d Woodlawn plant and gathering system, which includes 135 miles of pipe, and the McLeod, Hallsville and Darco gathering systems, which treat more than 40 MMcf/d.

CEFS also agreed to pay $89 million to buy Encana Oil & Gas (USA) Corp.'s Amoruso 139-mile-long gathering lines in East Texas, which now carry more than 200 MMcf/d from the Deep Bossier and Cotton Valley Lime formations in East Texas. In addition, CEFS obtained a 15-year contract with the Encana Corp. subsidiary to process gas from the Amoruso and Hilltop fields in Robertson and Leon counties.

Under the terms of the Encana agreement, which closed at the end of May, CEFS plans to expand the Amoruso systems as necessary to support future output within the dedicated area.

MMLP plans to use the proceeds from the Prism sale, expected to close at the end of July, to pay down debt, said CEO Ruben Martin.

"The divestiture of our East Texas and Northwest Louisiana natural gas gathering and processing assets reduces our exposure to nonfee based cash flow and commodity prices within the partnership. This will allow us to place greater focus on the expansion of our fee-based core operating assets. We see significant fee-based opportunities within our terminaling and storage segment and other opportunities associated with the transportation of hydrocarbons from major shale plays to market."

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