Expand sees value in keeping natural gas pipeline stake
Expand Energy Corp., Oklahoma City, is in “no rush” to sell its stake in the New Generation Gas Gathering (NG3) pipeline that entered service last month, the company’s chief operating officer told an investment bank conference on Nov. 20.
The 255-mile NG3 project was developed by Momentum Sustainable Ventures LLC and was placed into service Oct. 1 after starting commissioning work in late August. It is moving natural gas from the Haynesville basin to the Gulf Coast, ending in Gillis, La., and has a capacity of 1.7-bcfd. Expand—then still Chesapeake Energy before its merger with Southwestern Energy—signed onto the project in late 2022 and has a stake that executives valued at $317 million as of Sept. 30.
Asked at the Stephens Annual Investment Conference being held in Nashville if Expand might look to cash in on that commitment now that the NG3 pipeline is up and running, Josh Viets said “that option is there” but also made it clear he and other executives see upside to their investment.
“If somebody showed up at the door with something that we just couldn't pass up, we're going to listen,” Viets said. “But financially, the balance sheet is in a great spot and we feel no pressure to look at an opportunity to monetize that right now. We love the investment. We think there’s a ton of value with it and we only expect that value to increase over time.”
Viets also said that NG3 is today transporting between 1.2 bcfd and 1.3 bcfd per day as it continues to ramp up—albeit without the complete carbon-capture element that Momentum and its partners had envisioned. Of that amount, about 700 mcfd is gas Expand produced from its Haynesville operations, which last quarter averaged about 3.2 bcfd from seven rigs.
Viets spoke at the Stephens gathering the same day ExxonMobil Corp. executives said they had agreed to acquire a 40% interest in the Bahia natural gas liquids pipeline from Enterprise Products Partners LP. That 550-mile pipeline will transport NGLs from West Texas to Enterprise’s fractionation complex in Mont Belvieu, east of Houston. Were the Expand team look to monetize their NG3 interest, they would join their peers at Chevron Corp. and Diamondback Energy Inc., who have in recent months announced plans to sell pipeline assets. (See the links on the right.)
About the Author
Geert De Lombaerde
Senior Editor
A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications Healthcare Innovation, IndustryWeek, FleetOwner, Oil & Gas Journal and T&D World. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.