Atlas Pipeline Partners LP said Monday it was accelerating the completion of a $200 million, 200 MMcf/d processing plant in West Texas and separately has signed a contract with SandRidge Energy Inc., the partnership’s largest producer customer in the Mississippian Lime.
Atlas also reaffirmed its 2013 earning guidance ($310-360 million).
For more than a year, Atlas has been chasing “rapidly increasing” production in the Permian Basin in West Texas, launching plans in 2011 to construct a 200 MMcf/d cryogenic gas processing plant there (see Daily GPI, Nov. 17, 2011). Atlas’ overall processing capacity in West Texas will increase from 255 MMcf/d to 455 MMcf/d.
The Driver Plant was to be constructed in two phases with the first having capacity to handle 100 MMcf/d and expected to enter service this quarter, and the second 100 MMcf/d phase to come online a year later. But Atlas senior management is committing to having both phases operational “by the end of the first quarter or early in the second quarter.”
Citing the same continued Permian growth that launched the project in the first place, Atlas officials said they expect to use 60% of the plant’s capacity at the time of start up this spring, and they anticipate “steady growth in volumes” throughout this year.
Separately, Atlas said the deal with SandRidge runs for five years, starting Jan. 1, 2013, and it has an extension option of turning the contract into a nine-year deal if the minimum level of throughput volume is met.
Atlas said the new contract is a percent-of-proceeds (POP) contract, complemented by additional fixed-fee gathering cash flow associated with underlying throughput volumes from SandRidge, whose management has been in the news in recent weeks regarding pressure from some of its largest investors to make changes in the Oklahoma-based exploration/production company (see Daily GPI, Dec. 27, 2012).
“Including the originally dedicated areas within SandRidge’s Oklahoma Mississippian position, the new agreement now includes the majority of SandRidge’s developed acreage within the burgeoning Mississippi Lime formation,” said an Atlas spokesperson.
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