Fueling Unconventional Oil & Gas Infrstructure, GE Unit Backs Howard Energy Partners' Acquistion of South Texas Gas Pipeline
Fueling the build out of unconventional oil, gas and gas liquids infrastructure to support North American shale, GE (NYSE: GE) unit GE Energy Financial Services has invested in Howard Energy Partners, owner and operator of 280 miles of natural gas pipelines in the Eagle Ford Shale of South Texas. Howard Energy will double its size by using the investment to partially fund the acquisition of Meritage Midstream Services' natural gas gathering assets in South Texas.
GE acquired a 30.6 percent stake in Howard Energy for an undisclosed amount. Other investors were Crosstex Energy, L.P. (NASDAQ: XTEX), Quanta Services, Inc. (NYSE: PWR) and Clear Springs Energy Company LLC. This transaction is expected to close in April, subject to regulatory approvals and customary closing conditions.
The 185 miles of Meritage pipelines includes the Eagle Ford Escondido Gathering System, which gathers gas, and the Cuervo Creek Gathering System, a wet gas stream with significant gas liquids content. Howard Energy, based in San Antonio, plans to expand these systems to meet increased demand for natural gas and gas liquids gathering from multiple geologic formations, including the Escondido, Olmos, San Miguel, Austin Chalk and Eagle Ford shale.
"The shale boom has created the need for a dramatic build out of oil and gas infrastructure in North America, requiring significant capital," said John Shepherd, a managing director at GE Energy Financial Services. "This fits perfectly with our strategy of working with expert management teams to meet rapidly growing producer demand for infrastructure. It plays to our strengths of flexibility in transaction structuring to meet our partners' needs, our access to large amounts of capital and GE's broad and deep shale expertise."
GE Energy Financial Services currently has nearly $3 billion of investments in midstream assets, including approximately 43,500 miles of gas pipelines in North America, gas distribution, gathering and processing, storage, terminals, refining, Master Limited Partnerships and LNG. It recently expanded its focus beyond gas infrastructure to petroleum logistics terminals, refined products and oil and gas liquids.
"Adding GE Energy Financial Services to our partnership accelerates our growth strategy and solidifies our position as a total–solutions provider for the Eagle Ford shale," said Mike Howard, Chairman and CEO of Howard Energy Partners. "Adding the Eagle Ford Escondido and Cuervo Creek assets to our portfolio enhances our position in the prolific South Texas area."
At closing, Howard Energy Partners will own and operate 450 miles of natural gas gathering pipelines in Webb, Dimmit, Frio, Maverick and Zavala counties in Texas. These systems gather more than 175 MMcf/d and can quickly expand as drilling ramps up.
GE Energy Financial Services