Summit Investments to buy into Ohio Gathering

Dallas-based Summit Investments, the general partner of Summit Midstream Partners (SMLP), has entered into an agreement to acquire Blackhawk Midstream’s equity interest in Ohio Gathering, a Utica Shale gathering system in southeastern Ohio, the firm said in a statement.

Summit Investments did not disclose the percentage it will be acquiring nor the purchase price. The firm did not respond to a request for comment.

However, Summit Investments did state that the agreement includes an option allowing the Dallas firm to increase its ownership interest in Ohio Gathering to 40 percent at any time prior to June 2014. Summit Investments intends to do so in the second quarter next year.

Ohio Gathering comprises two entities: Ohio Gathering Company and Ohio Condensate Company. Ohio Gathering owns, operates, and is developing midstream infrastructure in southeastern Ohio consisting of a liquids-rich natural gas gathering system; a dry natural gas gathering system; and a condensate transportation, storage and stabilization facility in the core of the Utica Shale play.

The Ohio Gathering Company is currently owned by MarkWest Utica EMG, a joint venture between MarkWest Energy Partners and the Energy and Minerals Group (EMG); and Blackhawk, a joint venture between Gulfport Energy and Wexford Capital.

The Ohio Condensate Company is currently owned by MarkWest Utica EMG Condensate, a separate joint venture between MarkWest and EMG; and Blackhawk.

MarkWest Utica EMG and MarkWest Utica EMG Condensate will each retain their 60 percent stake in Ohio Gathering and will continue to operate and develop the gathering infrastructure after Summit Investments exercises its option to increase its ownership to 40 percent.

The transaction is expected to close by January 31, 2014.

Summit Investments intends to offer all or a portion of its interest in Ohio Gathering to Summit Midstream Partners following the exercise of the option and the subsequent development of the assets.

“This transaction provides Summit Investments with an immediate and large-scale presence in the core of the Utica Shale play, where Ohio Gathering anticipates developing more than $3 billion of midstream infrastructure over the coming years,” Summit Investments president and chief executive Steve Newby said.

“The acquisition and subsequent development of Ohio Gathering will substantially increase the inventory of assets available at Summit Investments to be offered to SMLP,” he added.

Summit Investments was formed in 2009 by management members and funds controlled by private equity firm Energy Capital Partners, which together with its affiliates has over $8 billion in capital commitments focused on investing in North America’s energy infrastructure.

Summit Midstream Partners is a growth-oriented midstream energy company focused on owning and operating midstream energy infrastructure assets that are located in the core areas of unconventional resource basins, primarily shale formations, in North America.