SemGroup Buys Midstream Assets From Chesapeake

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Estimated Price
300MM
Description

Executed a definitive agreement to acquire equity interests of Mid-America Midstream Gas Services LLC, a wholly owned subsidiary of Chesapeake.

SemGroup Corp. (NYSE: SEMG) executed a definitive agreement to acquire the equity interests of Mid-America Midstream Gas Services LLC, a wholly owned subsidiary of Chesapeake Energy Corp. (NYSE: CHK), which is the owner of gas gathering and processing assets in the Mississippi Lime play for US $300 million in cash.

The transaction is expected to close by 3Q 2013 and is subject to certain regulatory approvals and closing conditions.

Acquisition Highlights

  • 200 miles of gathering pipeline;
  • Rose Valley I plant: 200 million cubic feet per day cryogenic processing plant, expected to be operational 1Q 2014;
  • Rose Valley II plant: 200 million cubic feet per day cryogenic processing plant, expected to be operational 1Q 2016;
  • About 540,000 net acre dedication in the core of the Mississippi Lime play, supported by a recently announced joint venture between Chesapeake Energy Corp. and Sinopec International Petroleum Exploration and Production Corp. (NYSE: SHI); and
  • Chesapeake Energy Corp. has committed to a 20-year, 100% fee-based, gas gathering and processing agreement.

Rose Valley plants I and II require US $125 million of additional capital expenditures for completion, as well as additional capital related to future well connects. Combined with the company's existing facilities, SemGroup will have a total processing capacity of 600 million cubic feet per day in Northern Oklahoma and with 655,000 net acre dedications within the core of the Mississippi Lime play, opportunity to further grow as production increases.

SemGroup will fund the acquisition under existing committed credit facilities. LCT Capital LLC and Citi are financial advisors to SemGroup.

SemGroup Corp., together with its subsidiaries, provides gathering, transportation, storage, distribution, marketing, and other midstream services. The company is headquartered in Tulsa, Okla.