EV Energy Partners Exits the Region
Williams Partners L.P. (ticker: WPZ) has increased its equity interest to 70% in Utica East Ohio Midstream LLC (UEO), the company announced on April 6, 2015. The transaction involved EV Energy Partners’ (ticker: EVEP) 21% stake for total consideration of $575 million. M3 Midstream holds the remaining 30% interest in the project, but holds the right to acquire a portion of EVEP’s interest for the same price. If M3 decides to exercise the option, ownership will be 62/38 split in favor of Williams.
In the press release, Alan Armstrong, Chief Executive Officer of Williams Partners, said the acquisition supports the company’s growth strategy in key basins. He added: “This fixed-fee business will be accretive beginning in 2015 and the partnership has attractive growth opportunities as the Utica continues to develop.”
Williams Partners, formerly known as Access Midstream Partners before Williams consolidated its subsidiaries, hit record volumes in Q4’14, and management referred to the UEO venture as a “major contributor” to the record.
Utica East Ohio Midstream’s network spans four counties and has total capacity of 800 MMcf/d from four processing plants. EVEP management said in March that utilization rates were high – about 700 MMcf/d of flow. Other infrastructure includes a 135 MBOEPD natural gas liquids (NGL) fractionation facility and 600 MBOE of NGL storage capacity.
EV Energy Partners Completes Utica Midstream Divestures
EV Energy Partners no longer has a midstream foothold in the Utica Shale, but it still owns net working interest in about 173,000 acres.
The company divested its 9% interest in Cardinal Gas Services in September 2014 for $162 million, meaning the MLP has generated total proceeds of $737 million from selling its Utica pipeline assets. In a news release, EVEP said its net capital contribution to UEO was approximately $294 million. All proceeds from the Utica deals were primarily intended to pay down debt, but the remainder may be utilized to make EVEP a player on the acquisition front. Michael Mercer, President and Chief Executive Officer of EV Energy Partners, said: “We are pleased with the returns we achieved and look forward to participating in what we expect to be an attractive upstream A&D market in the second half of the year.”
Mercer previously mentioned the company was in the process of monetizing the midstream assets in EVEP’s Q4’14 conference call. However, the company has no plans to sell its acreage in the Utica or Eagle Ford until prices recover. “In my over 40 years in this business, the best acquisitions that I’ve done were in the six downturns previous to the current downturn,” Mercer said. “We’re exploring alternative structures with third parties to provide additional capital to drill undeveloped acreage and increase cash flow.”
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