Summit ups stake in Ohio Gathering

Dallas-based Summit Investments has exercised an option to increase its stake in Ohio Gathering to 40% for approximately $377m.

Summit Investments, the general partner of Summit Midstream Partners (SMLP), has decided to exercise an option to increase its equity interest in Ohio Gathering to 40 percent, reimbursing Mark West Energy Partners and Energy & Minerals Group (EMG) approximately $377 million for the additional interest, the general partner said in a statement.

The Dallas-based firm first acquired a stake in Ohio Gathering, a Utica Shale gathering system in south-eastern Ohio, in December 2013, when it acquired the equity interest that Blackhawk Midstream held in the system at the time.

While Summit Investments did not disclose the percentage acquired nor the purchase price of the first transaction, it stated that it would offer all or a portion of its interest in Ohio Gathering to Summit Midstream Partners after exercising its option to increase its ownership. However, it did not make clear in the most recent statement whether it would do so or not. The firm did not respond to a request for clarification.

Ohio Gathering, which comprises two entities – Ohio Gathering Company and Ohio Condensate Company – owns, operates, and develops midstream infrastructure in south-eastern Ohio consisting of a liquids-rich natural gas gathering system; a dry natural gas gathering system; and a condensate transportation, storage and stabilisation facility in the core of the Utica Shale play.

Through this joint venture, Summit Investments, Mark West and EMG expect to develop over $3 billion of natural gas gathering and condensate stabilisation infrastructure for customers, according to the statement. Currently, Ohio Gathering gathers approximately 181 million cubic feet per day.

“This acquisition, coupled with our 40.0 percent share of future Ohio Gathering development capital expenditures, represents the largest transaction ever by the Summit enterprise,” said Steve Newby, Summit Investments’ president and chief executive. “Our team is excited about increasing Summit's interests in Ohio Gathering and partnering with Mark West and EMG, two first-class organisations, to develop this strategically important natural gas gathering and condensate stabilisation infrastructure in the core of the Utica Shale.”

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.