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New Midstream Player Targeting Shale Plays

Energy Capital Partners (ECP) has formed Summit Midstream Partners LLC to acquire and develop midstream assets in traditional and emerging North American production basins and import centers with an initial focus on the Barnett Shale.

ECP also announced last Wednesday Summit's acquisition of 75% of DFW Midstream Services LLC from a subsidiary of Energy Future Holdings Corp. (EFH) and DFW Midstream's acquisition of gas gathering assets in the Barnett Shale from Chesapeake Energy Marketing Inc., a division of Chesapeake Energy Corp.

"The DFW Midstream acquisition assures that Summit will hit the ground running with a unique footprint in the Barnett Shale and a terrific partner in EFH," said ECP partner Tom Lane.

DFW Midstream has signed long-term gas gathering agreements with affiliates of Chesapeake, XTO Energy and Carrizo Oil & Gas, which are among the largest producers of gas in the Barnett Shale.

With the completion of these acquisitions Summit Midstream owns 75% of DFW Midstream, with the other 25% retained by EFH. DFW Midstream will focus on the development, construction and operation of a gas gathering system in the core of the Barnett Shale. To date, DFW Midstream has developed approximately 25 miles of gathering pipelines and plans to build approximately 60 miles of gathering lines over the next 12 months.

"It's obviously a fairly urban environment so it requires a fair amount of operational and development expertise to get the system in. It's not your everyday gathering situation...It's what we call the core of the core of the Barnett," said Summit CEO Steve Newby.

While DFW is focused on the Barnett Shale, Summit is targeting all of the larger shale plays, Newby told NGI. "I would characterize our focus on the natural gas side as primarily being in the large shale plays," he said. "We feel like those are going to be where growth is going to come from from a production standpoint and by default from an infrastructure standpoint. And also they're to a large extent underserved from an infrastructure standpoint. A good example is the Barnett, the most developed of the shale plays, and we're still doing a fairly large project there."

Summit is headquartered in Atlanta. Private equity firm ECP has offices in Short Hills, NJ, and San Diego.

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