Azure Midstream Holdings LLC, launched last year by a team of industry veterans, on Thursday agreed to pay $910 million to buy TGGT Holdings LLC, a Haynesville Shale gathering system, in a transaction valued at $910 million.
TGGT, jointly owned by Exco Resources Inc. and BG Group, operates more than 1,000 miles of gathering pipelines in East Texas and North Louisiana with a combined capacity of about 4 Bcf/d, including 1.4 Bcf/d of treating capacity.
Azure management agreed to pay $875 million in cash and provide about 8% equity interest, which would be split equally between a BG affiliate and an Exco subsidiary.
Dallas-based Exco, which expects the sale to be completed before the end of the year, said it should receive $230 million net and would use the proceeds to lower debt.
I.J. "Chip" Berthelot launched Azure in 2012. He previously had created Laser Northeast Gathering Co. LLC in 2005, which initially invested in the Panola gathering system in East Texas, and most of those assets were sold to Eagle Rock Energy Partners in 2007 for $264.4 million.
Laser Northeast's Appalachian assets became one of the first big gathering systems in Pennsylvania's Marcellus Shale. Components of the Laser Northeast Gathering Co. now are owned by Williams Partners LP (see Shale Daily, Dec. 23, 2011).
Berthelot, who is president, previously was president of Loco Energy Co. and had been COO of Midcoast Energy Resources Inc. Azure's management team also draws on years of midstream experience. David Garrett, vice president of business development, was senior vice president (SVP) of the western Texas region for DCP Midstream. Dennie Dixon, vice president of operations and engineering, had been SVP of operations for Regency Energy Partners.
Azure now owns 3,800 miles of former crude service pipeline, mostly in Texas, with 400 miles of gas service in the Permian Basin, Eagle Ford Shale and in East and Southeast Texas, including the Barnett Shale. It also has a 5 MMcf/d gas plant in Scurry County, TX. In addition, Azure has assets in the New Albany Shale in Illinois.