SandRidge Energy Inc. (SD) said Oct. 5 it will buy back a strategic midstream asset in West Texas that will support its natural gas production in the region.
The Oklahoma City company entered into an agreement to acquire the Piñon Gathering Co. LLC from EIG Global Energy Partners for $126 million.
Piñon owns about 370 miles of gathering lines supporting the natural gas and CO2 production from SandRidge's Piñon Field in West Texas.
SandRidge will pay $48 million cash and $78 million of its senior secured notes due 2020.
As a result of the transaction, the company will eliminate minimum volume commitment payments of about $40 million per year. This is forecasted to continue until 2021 with additional contractual fees thereafter.
The transaction is anticipated to close in the fourth quarter of 2015, subject to the expiration or termination of the applicable waiting period under the Hart Scott Rodino Act.
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