Sanchez Energy has signed an agreement to sell certain pipeline, gathering and compression assets in the Eagle Ford Shale in South Texas, US to Sanchez Production Partners (SPP) for about $345m.
The transaction will see Sanchez Energy selling about 150 miles of midstream gathering lines and associated midstream infrastructure in four gathering and processing facilities, located on the Western part of its Catarina asset.
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Sanchez Energy plans to use the sale proceeds to further bolster its liquidity position which stood at $572m as of 30 June 2015.
Following the sale of midstream assets, the company’s pro forma liquidity is expected to increase to about $918m.
Sanchez Energy CEO Tony Sanchez III said: "The midstream assets which we acquired as part of the Catarina transaction in 2014 cover a dedicated area of approximately 35,000 net acres, or about 16% of our total Eagle Ford footprint.
"By further enhancing our liquidity and financial flexibility, we are now well positioned to accelerate drilling plans as commodity prices recover or to capitalise on acquisition opportunities as conditions may warrant."
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By GlobalDataFurther, the company will sign a gathering agreement with SPP that provides for fixed rates over an initial term of 15 years and will result in an increase in lease operating expense (LOE) of about $1.95 per barrel of oil equivalent (BOE).
SPP interim chief executive officer Gerry Willinger said: "The Western Catarina Midstream Transaction represents the culmination of over two years of work to refocus and improve SPP’s strategic direction and financial outlook."
The transaction, which is subject to normal and customary closing and post-closing adjustments, is expected to close in October 2015.
Image: Sanchez Energy will sell about 150 miles of midstream gathering lines. Photo: courtesy of blackzheep/FreeDigitalPhotos.net
