Global Infrastructure Partners, a USD5.64bn infrastructure private equity fund, has entered into a definitive agreement to form a midstream natural gas gathering joint venture with Chesapeake Energy.
As part of the transaction, GIP will make a USD588m cash payment to purchase a 50 per cent interest in a new entity which will include substantially all of Chesapeake’s natural gas gathering assets in the Barnett Shale and the Arkoma, Anadarko, Delaware and Permian Basins.
The new entity, Chesapeake Midstream Partners, will provide fee-based gathering services to both Chesapeake and third-party natural gas producers in these important regions.
Chesapeake and CMP will enter into a long-term agreement in connection with the transaction to provide gathering, treating, dehydration and compression services for Chesapeake’s growing natural gas production in the Barnett Shale and Mid-Continent regions. Under the terms of this agreement, Chesapeake will provide CMP with a ten year minimum volume commitment.
Adebayo Ogunlesi, managing partner at GIP, says: "GIP is excited about the opportunity to partner with Chesapeake in the creation of this important new midstream joint venture. The future of natural gas is bright and Chesapeake brings unrivalled expertise and experience to this partnership. We look forward to complementing the proven capabilities of our new partner with our knowledge of this industry sector, our strong operational focus and our financial strength."
Matthew Harris, the partner leading the transaction for GIP, says: "The creation of this new joint venture will provide important services to Chesapeake and will create a platform for growth in these significant natural gas producing regions. Furthermore, the volumes committed under the long-term gathering agreement provide a strong foundation of fee-based revenue for the new joint venture."
GIP was advised by Credit Suisse Securities (USA) and Chesapeake was advised by UBS Investment Bank.