Shale Daily / NGI All News Access

New Midstream Company Targeting Liquids-Rich Utica

Crosstex Energy Inc. and former management of Enerven Compression Services are forming a company called E2 that will serve Utica Shale producers with natural gas compression and condensate stabilization facilities for their liquids-rich production.

Crosstex is putting up $50 million, which will include new gas compression and condensate stabilization facilities. The investment is intended to complement affiliate Crosstex Energy LP's (the partnership) assets in the Ohio River Valley, which encompass crude oil, condensate and logistics operations in the Utica and Marcellus shales.

E2 will build, own and operate two gas gathering compressor stations and condensate stabilization assets in Noble and Monroe counties in the southern portion of the Utica Shale in Ohio, Crosstex said. The counties are immediately east of the partnership's assets in the Ohio River Valley. The facilities are supported by a long-term, fee-based contract with an active producer, Crosstex said. E2 will serve as the manager and operator of the assets with commercial operations expected to start during the third quarter.

The investment in E2 will be made by the Crosstex Energy Inc., which owns the partnership's general partner. A unit of Crosstex Energy Inc. has entered into a $75 million senior secured credit facility to finance the E2 investment. Crosstex Energy Inc. will own about 93% of E2 and has rights to purchase the remaining interest in the future.

"Our investment in E2 is a strategic step in growing our platform in the Ohio River Valley. Utilizing the corporation for this investment provides an additional source of capital for growth," said Crosstex CEO Barry E. Davis. "Crosstex's entrance into condensate stabilization is another step in realizing our long-term vision for offering additional condensate solutions in the Utica.

Not quite a year ago, Crosstex Energy LP struck a deal to pay $210 million for privately held pipeline services provider Clearfield Energy Inc., which expanded its crude oil and condensate services in the Utica (see Shale Daily, May 9, 2012).

Last November, Enerven compression and dehydration assets in West Virginia's Harrison and Doddridge counties were acquired by Crestwood Marcellus Midstream LLC (see Shale Daily, Nov. 27, 2012).

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