Development of Midstream Assets in Ohio Utica Shale Play
As we have reported before, some commentators have observed that one of the principal reasons for the slow pace of growth in the Ohio Utica shale play has been the lack of midstream assets in the region. Two major companies in the natural gas industry, Crosstex Energy, L.P., and Devon Energy Corp. have announced a business combination that may bring access to these sorely needed assets to Ohio’s Utica and Marcellus shale plays.
Crosstex Energy, Inc. and Crosstex Energy, L.P. will combine with most of Devon’s U.S. midstream assets, joining the companies’ natural gas gathering and transportation pipelines, processing, fractionation, logistics and other midstream assets. The new company will trade publicly as a general partnership and master limited partnership with a combined expected adjusted EBITDA of approximately $700 million in 2014. Devon and Crosstex announced that they expect the transaction to close in the first quarter of 2014. The new company is expected to have significant assets in many of the nation’s premier oil and gas regions, including in the Utica and Marcellus shale plays in Ohio, though indications are that its headquarters will be located in Dallas, where Crosstex is based, with a continued employee presence in Oklahoma City, where Devon is headquartered. The strategic rationale for the transaction includes increased scale and diversification as a result of assets in many localities – including the Utica and Marcellus shale plays – and an increasing focus on liquids-based growth projects.
For additional press coverage of the proposed transaction, see:
UPDATE 4-Devon Energy, Crosstex to Form Pipeline Company
Utica shale players Crosstex Energy, Devon Energy Combining Midstream
Devon, Crosstex Energy to Merge Midstream Assets