Sanchez Midstream Partners Announces Expansion of Midstream Joint Venture with Targa Resources in South Texas
23 May 2018 - 8:00PM
Sanchez Midstream Partners LP (NYSE American:SNMP) (“SNMP” or the
“Partnership”) today announced that the Partnership has executed a
series of agreements with Targa Resources Corp. (“Targa”)
(NYSE:TRGP) pursuant to which the parties have merged their
respective 50 percent interests in the entities that own the high
pressure Carnero Gathering Line and Raptor Gas Processing Facility
to form an expanded 50/50 joint venture in South Texas (the
“Carnero JV”).
In addition to owning the Raptor Gas Processing
Facility, the Carnero JV has acquired Targa’s 200 million cubic
feet per day (“MMcf/d”) Silver Oak II Gas Processing Plant (“Silver
Oak II”), located in Bee County Texas, which expands the processing
capacity of the joint venture from 260 MMcf/d to 460 MMcf/d, and
owns the full capacity of the Carnero Gathering Line, which has a
design limit (without compression) of 400 MMcf/d. Additional
enhancements to the parties’ prior joint ventures include new
dedication of over 315,000 gross Comanche acres in the Western
Eagle Ford, operated by Sanchez Energy Corporation (NYSE:SN)
(“Sanchez Energy”), under a new long-term firm gas gathering and
processing agreement. The agreement with Sanchez Energy,
which has been approved by all of the unaffiliated Comanche working
interest partners, establishes commercial terms for the gathering
of gas on the Carnero Gathering Line and processing at the Raptor
Gas Processing Facility and Silver Oak II. Prior to execution
of the agreement, Comanche volumes were gathered and processed on
an interruptible basis, with the processing capabilities of the
joint ventures limited by the capacity of the Raptor Gas Processing
Facility.
MANAGEMENT COMMENTARY“Having
completed the transformation of SNMP to a midstream master limited
partnership in 2017, we have worked diligently over the last
several months to expand the Partnership’s opportunity set in South
Texas,” said Gerry Willinger, Chief Executive Officer of the
general partner of SNMP. “As a result of this effort, we are
pleased to announce an expansion of the Partnership’s joint venture
with Targa in South Texas.
“The Carnero JV enhances our midstream strategy,
secures and expands our third-party volumes, and is expected to
provide additional stable, fee-based cash flow to the Partnership
over time. The structure of the transaction greatly
simplifies our previous joint ventures with Targa, which
facilitates greater operating efficiencies and provides a solid
platform for the continuing growth of the Carnero JV in South
Texas. The transaction is expected to be immediately
accretive to the Partnership, with benefits that increase as the
joint venture services the needs of Sanchez Energy and other
producers and marketers in South Texas.
“Because the Partnership’s joint ventures with
Targa previously processed gas from the Comanche asset on an
interruptible basis, we do not currently anticipate that the new
joint venture with Targa will result in a material impact on the
full year 2018 forecast released by the Partnership last
week. That being said, by adding Silver Oak II and the
additional capacity of the Carnero Gathering Line to the Carnero
JV, our South Texas midstream assets, which include Western
Catarina Midstream and the Seco Pipeline, are strategically
positioned to capture the increase in volumes from the significant
development activity underway in the Western Eagle Ford without
spending any incremental development dollars. As we
anticipate increasing volumes through our expanded system in 2018
and the years to come, we have preemptively put ourselves in a
position to continue to grow the Partnership while being
disciplined with capital. Accordingly, we see the new,
expanded joint venture as a key step in positioning the Partnership
for continued growth in South Texas.”
ABOUT THE PARTNERSHIPSanchez
Midstream Partners LP (NYSE American:SNMP) is a growth-oriented
publicly-traded limited partnership focused on the acquisition,
development, ownership and operation of midstream and other energy
related assets in North America. The Partnership has
ownership stakes in oil and natural gas gathering systems, natural
gas pipelines, and a natural gas processing facility, all located
in the Western Eagle Ford in South Texas.
ADDITIONAL
INFORMATIONAdditional information about SNMP can be found
in the Partnership’s documents on file with the U.S. Securities and
Exchange Commission (www.sec.gov) and in the “Investor
Presentation” available on the Partnership’s website
(www.sanchezmidstream.com).
FORWARD-LOOKING STATEMENTSThis
news release contains, and the officers and representatives of the
Partnership and its general partner may from time to time make,
statements that are considered forward–looking statements within
the meaning of the Securities Act of 1933 and the Securities
Exchange Act of 1934. These forward-looking statements are
subject to a number of risks and uncertainties, many of which are
beyond our control, which may include statements about our:
business strategy; acquisition strategy; financing strategy;
ability to make, maintain and grow distributions; the ability of
our customers to meet their drilling and development plans on a
timely basis or at all and perform under gathering, processing and
other agreements; future operating results; the ability of our
partners to perform under our joint ventures and partnerships;
future capital expenditures; and plans, objectives, expectations,
forecasts, outlook and intentions. All of these types of
statements, other than statements of historical fact included in
this news release, are forward-looking statements. In
some cases, forward-looking statements can be identified by
terminology such as “may,” “could,” “should,” “expect,” “plan,”
“project,” “intend,” “anticipate,” “believe,” “estimate,”
“predict,” “potential,” “pursue,” “target,” “continue,” the
negative of such terms or other comparable terminology.
The forward-looking statements contained in this
news release are largely based on our expectations, which reflect
estimates and assumptions made by the management of our general
partner. These estimates and assumptions reflect our best
judgment based on currently known market conditions and other
factors. Although we believe such estimates and assumptions
to be reasonable, they are inherently uncertain and involve a
number of risks and uncertainties that are beyond our
control. In addition, management’s assumptions about future
events may prove to be inaccurate. Management cautions all readers
that the forward-looking statements contained in this news release
are not guarantees of future performance, and we cannot assure any
reader that such statements will be realized or the forward-looking
events and circumstances will occur. The forward-looking
statements speak only as of the date made, and other than as
required by law, we do not intend to publicly update or revise any
forward-looking statements as a result of new information, future
events or otherwise. These cautionary statements qualify
all forward-looking statements attributable to us or persons acting
on our behalf.
PARTNERSHIP CONTACT
Kevin SmithVP of Investor Relations(281)
925-4828
General Inquiries: (713)
783-8000
www.sanchezmidstream.com
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