U.S. antitrust regulators on Tuesday cleared the path for Penn Virginia Resource Partners LP’s (PVR) purchase of natural gas gathering and processing assets in Oklahoma and Texas from Cantera Resources Holdings LLC, a portfolio company of Morgan Stanley Capital Partners, for $191 million in cash.

The Federal Trade Commission granted an “early termination” notice, which meant that it had completed its review of the transaction without taking any action that could have imperiled the acquisition by Radnor, PA-based PVR. Penn Virginia first announced the deal in late November (see Daily GPI, Nov. 24).

The midstream assets include 3,400 miles of gas gathering pipelines that supply three gas processing facilities with 160 MMcf/d of total capacity. The assets are located in four geographic regions:

In total, the assets currently gather 135 MMcf/d and the gas plants process 120 MMcf/d and produce 9,300 barrels per day of natural gas liquids. Most of Cantera’s operating, commercial and support staff are expected to remain with PVR after the closing, which is expected in the first quarter of 2005.

PVR projects that the midstream gas transaction will generate about $25-28 million in incremental cash flow from operations during the first 12 months following the closing. The partnership said it will use a combination of debt facilities and new equity capital to close the acquisition.

PVR is a limited partnership formed by Penn Virginia Corp. in July 2001 to primarily manage coal properties in the United States. PVR does not operate any mines, but rather enters into long-term leases with third-party mine operators for the right to mine coal reserves in exchange for royalty payments. As of Dec. 31, 2003, the company’s properties contained 588 million tons of proven and probable coal reserves located in 241,000 acres in Virginia, West Virginia, New Mexico and eastern Kentucky.

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