MarkWest Energy Partners LP is buying American Central East Texas Gas Co.’s Carthage gas gathering system and processing assets in East Texas for $240 million. The 180-mile gathering system serves about 1,700 wells in the Carthage field, gathering gas from the Cotton Valley, Pettit and Travis Peak formations, and currently is undergoing an 82-mile expansion.

MarkWest said it expects the deal to generate about $10 million in cash flow for the rest of 2004, $30 million in 2005 and $50 million/year by 2006 because of incremental growth projects that already are underway. The projects include gathering expansions to new producers, a new processing facility, and a new gas liquids pipeline.

The Carthage gathering system’s current throughput is 245 MMcf/d and is anticipated to increase to 310 MMcf/d by the end of the year. The system has a capacity of 350 MMcf/d. Also included in the acquisition is a 175 MMcf/d processing facility currently under construction and an NGL pipeline to be constructed in 2005.

“This acquisition fits very well with our current asset base in Texas and allows us to significantly expand our midstream services,” said MarkWest CEO Frank Semple. “The Carthage Field has a large remaining reserve potential, which will provide strong cash flows and expansion opportunities well into the future.”

MarkWest said the acquisition will be funded initially with interim debt financing. It will permanently finance the assets with a combination of equity and debt in the near term. The goal will be to maintain a debt-to-total capital ratio of less than 50% in keeping with MarkWest’s long-term balance sheet objectives.

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