Howard Energy to acquire Marcellus gathering assets for $500 million

March 20, 2015
Howard Midstream Energy Partners LLC, San Antonio, has agreed to acquire gathering assets in Bradford and Lycoming counties in northeastern Pennsylvania from Southwestern Energy Co., Houston, for $500 million. The deal is expected to close in the second quarter.

Howard Midstream Energy Partners LLC, San Antonio, has agreed to acquire gathering assets in Bradford and Lycoming counties in northeastern Pennsylvania from Southwestern Energy Co., Houston, for $500 million. The deal is expected to close in the second quarter.

The assets, serving the Marcellus shale, include 100 miles of natural gas gathering pipeline with a capacity of 600 MMcfd.

In addition to the existing systems, Howard Energy plans to design, construct, and operate a natural gas gathering system for Southwestern in Tioga County, Pa. Once operational, the system is expected to add as much as 380 MMcfd of capacity in the area.

Howard Energy has assets in the Eagle Ford shale of South Texas (OGJ Online, Feb. 8, 2013).

For Southwestern, the sale proceeds will be used to repay borrowings under the company’s $500-million term loan facility that matures in December 2016.

“With this deal, we are well on our way to achieving the $600 million to $800 million in divestiture proceeds announced as part of that plan,” commented Steve Mueller, Southwestern chairman and chief executive officer.

Southwestern recently undertook a large-scale expansion of its Marcellus assets.

The company acquired 413,000 net acres in the southern Marcellus and a portion of the eastern Utica shale from Chesapeake Energy Corp. for $5.375 billion (OGJ Online, Oct. 16, 2014); 46,700 net acres from WPX Energy Inc. for $300 million (OGJ Online, Dec. 3, 2014); 30,000 net acres from Statoil ASA for $394 million (OGJ Online, Dec. 23, 2014); and, initially, 162,000 net acres from Chesapeake for $93 million (OGJ Online, Apr. 30, 2013).