Private-equity firm ArcLight Capital Partners LLC committed $400 million to new portfolio company Republic Midstream LLC, which formed agreements with Penn Virginia Corp. (NYSE: PVA) to create an Eagle Ford-focused midstream infrastructure for Penn Virginia, Archlight said July 30.
The companies formed long-term, fee-based transportation agreements, and Republic Midstream will be managed by American Midstream Partners LP (NYSE: AMID) and JP Energy Partners LP, two of ArcLight’s midstream portfolio companies, ArcLight added.
After operations begin, ArcLight will likely offer each company the right to purchase 50% of Republic, the company said.
The infrastructure will consist of a 180-mile long gathering system in north-central Gonzales and western Lavaca counties, Texas; a takeaway pipeline that can hold 80,000 barrels per day will move gas to a delivery point in Lavaca County, the company said.
Penn Virginia operates five rigs in the Eagle Ford, and Republic will have more than 1,300 drilling locations, ArcLight added.
"ArcLight is excited to form a new venture managed jointly by two leading midstream operators -- American Midstream and JP Energy -- to leverage their existing footprints in the core of the eastern Eagle Ford Shale, a premier subplay with some of the best drilling economics in North America," said Daniel Revers, ArcLight's managing partner.
"With our equity commitment, experience in capitalizing new ventures and the proven track record of our portfolio companies managing the entity, Republic Midstream is positioned to become a critical infrastructure solution for Penn Virginia and other regional operators," he added.
"We are excited to expand our relationship with Penn Virginia and to continue developing a significant midstream asset base for crude and natural gas systems in the Eagle Ford," said Steve Bergstrom, American Midstream's executive chairman, president and CEO.
ArcLight Capital Partners LLC is based in Boston and Penn Virginia Corp. is based in Radnor, Pa.JP Energy Partners is an MLP based in Irving, Texas.
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