MarkWest Energy Partners LP has agreed to buy American Central Western Oklahoma Gas Co. LLC’s Foss Lake gathering system and Arapaho gas processing assets in Western Oklahoma for $38 million.

Englewood, CO-based MarkWest said it expects the acquisition to generate $5.5-$6 million per year of cash flow from operations and is anticipated to close and be effective on Dec. 1.

Consisting of 167 miles of 20-, 12-, 8-, 6-, and 4-inch diameter pipeline connected to 280 wells, the Foss Lake Gathering System includes 11,000 horsepower of compression and has a capacity of 65 MMcf/d with the ability to expand to 75 MMcf/d. Currently, system throughput is 58 MMcf/d. All of the gas gathered into the Foss Lake system is ultimately compressed and delivered to the Arapaho processing plant.

The Arapaho plant is a reconditioned facility that was upgraded and modernized when installed in early 2000. All of the residue gas from the Arapaho plant is delivered into the Panhandle Eastern Pipeline, while Koch Hydrocarbon LP, purchases all of the natural gas liquids extracted from the plant.

“The Anadarko basin has a large remaining reserve potential and should allow the Foss Lake system to continue to grow and provide strong cash flows well into the future,” said Frank Semple, president of MarkWest Energy Partners.

Initially the acquisition will be financed using MarkWest’s bank credit facilities. However, the company noted that its ongoing strategy is to reduce an overall debt-to-total capital ratio to a less than 50% level.

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