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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.”

Source: Utica East Ohio

Source: Utica East Ohio Midstream

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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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.