With the $500 million purchase of Southwestern Energy Co.’s gathering assets in Pennsylvania’s Bradford and Lycoming counties, Howard Energy Partners is now at the heart of the Marcellus Shale action.
The companies announced the purchase and sale agreement March 19 and the transaction is expected to close in the second quarter of 2015. San Antonio-based Howard Energy Partners plans to open an office in Pennsylvania upon closing.
The assets include approximately 100 miles of natural gas gathering pipeline, with nearly 600 million cubic feet per day of capacity and 53,000 horsepower of compression. The proceeds from the transaction will be used to substantially repay borrowings under Southwestern Energy’s $500 million term loan facility that matures in December 2016.
“We are excited to have this deal in place as it represents a major step toward completing our acquisition financing plan that we previously announced,” remarked Steve Mueller, chairman and CEO of Southwestern Energy. “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.”
In addition to the existing systems, Howard Energy Partners plans to design, construct and operate a new natural gas gathering system for Southwestern Energy Co. in Tioga County, Pennsylvania. Once fully operational, the new system is expected to add up to 380 million cubic feet per day of capacity in the area.
“This is a significant transaction for us as these established assets place Howard Energy Partners in the heart of the prolific Marcellus Shale,” said Brad Bynum, president and co-founder of Howard Energy Partners. “This acquisition is a testament to our long-term growth strategy to broaden our footprint and build a diversified portfolio of large-scale assets and revenue streams. We are excited about the development potential in the Marcellus and are honored to enter into this arrangement with Southwestern Energy, one of the largest producers in the area.”