Sabine Oil & Gas recently formed a joint venture (JV) with Align Midstream Partners II LLC in a partnership that advances its strategy to capture value from “wellhead to burner tip,” according to CEO Doug Krenek.

Headquartered in Houston, Sabine operates in the Haynesville Shale and Cotton Valley plays in East Texas. The formerly publicly traded E&P was acquired by Japan-based Osaka Gas Co. Ltd. last year.

The JV transaction marks Osaka Gas’ first acquisition in the midstream business in the U.S. and also follows the completion of the TOPS pipeline in East Texas by Align II.

“Given the long term view of Sabine and its parent Osaka, the TOPS investment is another step in vertically integrating Sabine and advancing our strategy of capturing value from the wellhead to the burner tip for our East Texas assets,” Krenek said in a statement on June 29.

The TOPS pipeline is a 30-mile, 16-inch diameter gas gathering pipeline in the Carthage area with interconnections to key downstream takeaway markets, said Align CEO Fritz Brinkman.

“The TOPS Pipeline will bolster our existing East Texas footprint and enhance our ability to serve the growing Haynesville production, providing our customers with greater access to a number of attractive markets across the Carthage hub,” Brinkman said.

Backed by private equity firm Tailwater Capital LLC, Align has gathering, processing and treating assets across the Haynesville and Cotton Valley plays. In November 2019, Align II announced the combination of its assets with Elevate Midstream LLC, expanding Align II’s footprint in East Texas. 

Align II marks the second partnership between the management team of Dallas-based Align and Tailwater, which currently manages more than $3.7 billion in committed capital, according to a company release.

Latham & Watkins LLP represented Sabine Oil & Gas in the midstream JV transaction with a Houston-based team led by partners Justin Stolte and Lauren Anderson, with associates Greg Sorensen and Ashley Nguyen.

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