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Mitchell Grows West Texas Presence

Mitchell Grows West Texas Presence

Mitchell Energy & Development Corp. announced it entered into a letter of intent to purchase Conoco's 50% interest in the Jameson processing plant and an associated 2,600-mile West Texas gas gathering system for an undisclosed sum. The Permian Basin plant and facilities currently are owned evenly by Conoco and Mitchell.

The Jameson plant, located in Coke County, has a processing capacity of 65 MMcf/d of natural gas and 10,000 barrels of NGLs. Currently, the plant is processing 43 MMcf/d of natural gas and making 7,500 b/d of NGLs. The partnership had jointly owned the plant since 1992.

Allen J. Tarbutton, Jr., president of Mitchell's gas services division, said, "This acquisition adds quality assets at a time when NGL demand is increasing dramatically. The additional 3,700 b/d of NGLs that we gain will boost our overall daily production to around 50,000 barrels."

The move was announced just days after Mitchell said it would increase its capital budget by over 20% due to increased earnings in the second quarter of this year (see NGI, Sept. 6). The company has a history of buying assets in West Texas, including a 1998 purchase of Texas Gas' North Texas gathering and processing facilities and Western Gas Resources' Perkins/Noel gathering system in West Central Texas for $31 million.

Guy Cantwell, a spokesman for Conoco, said the sale of the Jameson Plant interest is right in line with Conoco's strategy of putting dollars in assets that have the highest value for the company. "The basic reason we sold the plant is that it is not near any other processing facilities we own. We couldn't justify linking that facility with any of our other assets." Cantwell added that the Jameson Plant was only responsible for about 4% of the company's overall NGL production.

John Norris

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