Magnum Hunter Resources Corp. (NYSE: MHR) announced Sept. 16 it will sell a stake in its midstream subsidiary to Morgan Stanley Infrastructure Inc.
Houston's Magnum Hunter entered into an agreement with an affiliate of Morgan Stanley to sell roughly 6.5% equity interests in Eureka Hunter Holdings LLC for $65 million. The transaction implies Eureka's value is $1 billion.
Eureka Hunter conducts midstream services within the Marcellus and Utica shales in West Virginia and Ohio.
Through the transaction, the company has eliminated its need to fund future capital costs for Eureka Hunter for rolling six month periods, said Gary C. Evans, Magnum Hunter chairman and CEO, in a statement.
"We have found a new equity partner that has a similar vision and business philosophy as our management team and board, which will allow this tremendous asset to grow and prosper in preparation for an anticipated MLP offering sometime next year," he said.
Morgan Stanley will also acquire ArcLight Capital Partners LLC's 41% stake in Eureka for an undisclosed amount.
The transaction with ArcLight is expected to close in early October. Magnum Hunter's sale is anticipated to close in mid-January.
Upon closing, Magnum Hunter and Morgan Stanley will hold roughly 98% interest in Eureka Hunter.
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