US based oil and natural gas producer Magnum Hunter intends to divest its 45.53% stake in natural gas gathering subsidiary Eureka Hunter Holdings.
The firm looks to raise $600m-$700m through the sale of the pipeline unit, reports Reuters.
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The divestment is expected to help the firm in restructuring its balance sheet and will boost its liquidity.
Magnum Hunter has debts of around $65m, which needs to be repaid within July 10.
This divestment is a part of the firm’s initiative to pursue ‘liquidity enhancing transactions’, since it has raised about $55.6m till date.
Analysts at BMO Capital Markets were cited by the news agency as saying that the sale of Magnum’s ‘prize asset’ will leave the company with less valuable oil and gas business.
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By GlobalDataIn May, Magnum was looking to form a joint venture for parts of its Utica shale assets in Ohio and intended to sell undeveloped assets in Ohio and West Virginia.
It expected to raise nearly $50m by selling portions of its stake in Eureka Hunter then.
The remaining majority stake in Eureka Hunter is owned by Morgan Stanley Infrastructure.
The subsidiary unit is the owner for Eureka Hunter Pipeline, which operates natural gas pipelines in south eastern Ohio and northern West Virginia.
Eureka Hunter also owns natural gas treating and processing service providing company TransTex Hunter.
