HOUSTON, TX–(Marketwired – October 05, 2015) –
- Sanchez Energy and Targa Resources will collaborate on a new cryogenic natural gas processing plant and pipelines near Catarina
- The midstream projects are expected to provide significant marketing benefits, increase revenue, and lower transportation costs to Sanchez Energy
- Sanchez Energy will own ~50% equity interest in the new processing plant and gathering line
Sanchez Energy Corporation (SN) (“Sanchez Energy”, “SN” or the “Company”) today announced that it has entered into joint venture agreements with Targa Resources Partners LP (NGLS)(“Targa”) to construct a new cryogenic natural gas processing plant and associated high pressure gathering pipelines near Sanchez Energy’s Catarina asset in the Eagle Ford Shale. The processing plant, which will be located in La Salle County, Texas, is expected to have initial capacity of 200 million cubic feet per day (“MMcf/d”) with the ability to increase to 260 MMcf/d. In connection with the joint venture agreements, Sanchez Energy intends to invest approximately $115 million and receive a 50% ownership interest in the plant and the approximately 45 miles of high pressure gathering pipelines that will connect SN’s existing Catarina gathering system to the plant. Targa will hold all of the transportation capacity on the pipeline, and the gathering joint venture will receive fees for transportation.
The new midstream joint ventures are expected to provide significant operational and commercial benefits and improve yields, increase net-back prices, and lower the gathering and transportation fees SN currently pays for its Catarina production. Sanchez Energy has firm capacity for 125,000 Mcf/d of plant processing and associated pipeline capacity for the first five years and has dedicated the Catarina acreage and all production developed during the 15 year term. The Company has the option to deliver additional volumes and commit additional acreage to the new plant as production increases.
“These South Texas midstream joint ventures are a key part of our strategy aimed at capturing opportunities across the hydrocarbon value chain,” said Tony Sanchez III, CEO of Sanchez Energy. “Our participation in the joint ventures and commitment to anchor these projects are expected to result in access to attractive midstream assets that are central to SN’s major development activity in South Texas. The modern plant design is expected to deliver better liquids yields and lower processing fees, resulting in lower operating costs, higher net-backs, and greater price realization on our natural gas liquids revenue stream. The joint ventures are expected to also improve our access to end markets, including the developing Mexico and global LNG markets, and provide opportunities to increase revenue through utilization of the new midstream system to transport and process third party volumes.”
“Importantly, these South Texas midstream assets are expected to provide stable cash flows which a master limited partnership may find attractive and financeable at favorable rates. As the project develops, we intend to explore potential alternative financing or other options for the joint ventures to maintain our liquidity, while also exploring whether there are any mutually beneficial funding strategies with Sanchez Production Partners LP that might be attractive to us. We look forward to updating the investment community as our plans advance.”
The natural gas processing plant and gathering pipelines will be designed, built and operated by Targa. The plant is expected to be operational by early 2017.
An updated corporate presentation has been uploaded to the Company’s website (www.sanchezenergycorp.com) with additional slides detailing this transaction.
About Sanchez Energy Corporation
Sanchez Energy Corporation is an independent exploration and production company focused on the acquisition and development of unconventional resources in the onshore U.S. Gulf Coast with a current focus on the Eagle Ford Shale in South Texas, where the Company has assembled approximately 223,000 net acres, and the Tuscaloosa Marine Shale. For more information about Sanchez Energy Corporation, please visit our website (www.sanchezenergycorp.com).
About Targa Resources Partners LP
Targa Resources Partners LP is a publicly traded Delaware limited partnership formed in October 2006 by its parent, Targa Resources Corp., to own, operate, acquire and develop a diversified portfolio of complementary midstream energy assets. Targa is a leading provider of midstream natural gas and natural gas liquid services in the United States. In addition, Targa provides crude oil gathering and crude oil and petroleum product terminaling services. Targa is engaged in the business of gathering, compressing, treating, processing and selling natural gas; storing, fractionating, treating, transporting, terminaling and selling NGLs and NGL products; gathering, storing, and terminaling crude oil; and storing and terminaling petroleum products. Targa reports its operations in two divisions: (i) Gathering and Processing, consisting of two reportable segments – (a) Field Gathering and Processing and (b) Coastal Gathering and Processing; and (ii) Logistics and Marketing, consisting of two reportable segments – (a) Logistics Assets and (b) Marketing and Distribution. The financial results of Targa’s commodity hedging activities are reported in Other.
The principal executive offices of Targa Resources Corp. and Targa Resources Partners LP are located at 1000 Louisiana, Suite 4300, Houston, TX 77002 and their telephone number is 713-584-1000. For more information please go to www.targaresources.com.