Chesapeake Energy Corp.’s (NYSE: CHK) culling continued Feb. 28 with the announced sale of its midstream compression units from Texas to Pennsylvania for about $520 million.
Access Midstream Partners LP (NYSE: ACMP) and Exterran Partners LP (Nasdaq: EXLP) agreed to purchase an aggregate of 437 compression units and related assets from Chesapeake subsidiary MidCon Compression LLC in separate transactions.
Access will buy 103 compression units with total capacity of 200,000 horsepower for $160 million. The units service gathering systems in Ohio, Pennsylvania and West Virginia.
Exterran Partners takes 334 compression units with capacity of 440,000 horsepower for $360 million. The units service gathering systems in Arkansas, Louisiana, Oklahoma, Texas and Wyoming.
“Chesapeake continues to streamline its overall portfolio to focus on our core assets,” said Domenic J. Dell’Osso Jr., Chesapeake’s chief financial officer. “These sales are consistent with this strategy and will generate more than $500 million towards improving our balance sheet, while having minimal impact on our 2014 cash flow guidance.”
In conjunction with the acquisition, Exterran Partners and Access have entered a seven-year contract operations services agreement, to be effective as of the closing, under which Exterran Partners will provide contract compression services to Access in regions including the Permian, Eagle Ford, Barnett, Anadarko, Mississippi Lime, Granite Wash, Woodford, Haynesville and Niobrara basins.
The deal is expected to close by the end of second-quarter 2014.
“With this transaction, we continue to deliver on our strategy of growing our core contract operations business,” said Brad Childers, Exterran Partners CEO. “Because the units we are acquiring are highly standardized and average less than five years in age, the acquisition is also consistent with our strategy to modernize and standardize our existing fleet.”
MidCon Compression was formed by Chesapeake in 2003 and has grown into the second-largest compression rental service company by horsepower among North American natural gas compression companies.
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