Chesapeake Midstream Partners to buy Marcellus shale gathering lines

Chesapeake Midstream Partners LP (CMP) agreed to acquire Appalachia Midstream Services LLC (AMS), a Chesapeake Energy Corp. subsidiary, for $865 million. The transaction provides CMP with a 47% stake in 200 miles of gathering pipelines in the Marcellus shale in Pennsylvania.
Dec. 29, 2011
2 min read

Chesapeake Midstream Partners LP (CMP) agreed to acquire Appalachia Midstream Services LLC (AMS), a Chesapeake Energy Corp. subsidiary, for $865 million. The transaction provides CMP with a 47% stake in 200 miles of gathering pipelines in the Marcellus shale in Pennsylvania.

Closing was expected on Dec. 30. CMP is a gathering and processing master limited partnership. Throughput for the AMS assets as of Dec. 15 was just over 1 bcfd. AMS operates the assets under 15-year fixed fee gathering agreements with Marcellus natural gas and liquids producers.

CMP Chief Executive Officer J. Mike Stice said, “We are excited to expand our footprint into the Marcellus shale, further increasing our basin diversification and, more importantly, exposing us to the increased drilling activity in the liquid-rich regions in the Marcellus South.”

CMP is a spun-off subsidiary of Chesapeake, which is selling assets to trim long-term debt. Chesapeake of Oklahoma City formed CMP with Global Infrastructure Partners, a private investment company. Chesapeake now owns a 35% stake in CMP.

Aubrey K. McClendon, Chesapeake’s chief executive officer, said this was the independent’s second sale of gathering assets to CMP.

“Combined with our Springridge Haynesville asset sale of $500 million in December 2010, we have now dropped down gathering assets of approximately $1.4 billion into [CMP],” McClendon said of Louisiana pipelines.

CMP was established under a different name with some Chesapeake gathering pipelines.

“Combined with the $1.2 billion Barnett, Permian, and Midcontinent gathering assets contributed to the formation of [CMP]’s predecessor in September 2009, Chesapeake has successfully monetized $2.6 billion of its extensive midstream asset portfolio at a more attractive valuation than if these assets had stayed on Chesapeake’s balance sheet,” McClendon said.

About the Author

Paula Dittrick

Senior Staff Writer

Paula Dittrick has covered oil and gas from Houston for more than 20 years. Starting in May 2007, she developed a health, safety, and environment beat for Oil & Gas Journal. Dittrick is familiar with the industry’s financial aspects. She also monitors issues associated with carbon sequestration and renewable energy.

Dittrick joined OGJ in February 2001. Previously, she worked for Dow Jones and United Press International. She began writing about oil and gas as UPI’s West Texas bureau chief during the 1980s. She earned a Bachelor’s of Science degree in journalism from the University of Nebraska in 1974.

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