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Chesapeake to form midstream joint venture

Chesapeake Energy Corporation and York-based private equity fund Global Infrastructure Partners (GIP) announced Friday that they have entered into a definitive agreement to form a joint venture that includes Chesapeake’s midstream Barnett Shale assets.

As part of the transaction, Chesapeake will contribute certain natural gas gathering and processing assets into a new entity, Chesapeake Midstream Partners, LLC (CMP), and GIP will purchase a 50% interest in CMP. Chesapeake will retain the remaining 50% interest in CMP and receive $588 million in cash from GIP. The assets Chesapeake will contribute to the joint venture are substantially all of its midstream assets in the Barnett Shale and also the majority of the company’s non-shale midstream assets in the Arkoma, Anadarko, Delaware and Permian Basins. Closing of the transaction is anticipated to occur later this month.
 
CMP will enter into various agreements with Chesapeake, including a long-term gas gathering agreement at rates consistent with current market pricing. CMP will focus on unregulated business activities in service to both Chesapeake and third-party natural gas producers and its revenues will be generated almost entirely from fixed fee-based arrangements for gathering, compression, dehydration and treating services.
 

 

09/29/2009

 

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