Penn Virginia Resource Partners L.P. said it has acquired a natural gas gathering system and processing facility in the Texas panhandle area for about $11.44 million. The partnership said this acquisition will form an integral part of its PVR Panhandle Systems expansion plan.
The acquired assets, located in "Antelope Hills," comprise a 20 MMcf/d cryogenic processing facility and a nearly 15-mile gathering system in Lipscomb and Hemphill Counties. These assets are already connected to Penn Virginia’s existing Panhandle Systems and are strategically located to serve active producers in the Granite Wash formation.
Penn Virginia said its Panhandle Systems expansion plan is all about expanding the Antelope Hills processing facility to a new total capacity of 70 MMcf/d, as well as additional gathering system enhancement and optimization.
The partnership estimates the expansion will require an additional investment of roughly $35 million over the next twelve months, and will increase PVR's Panhandle total processing capacity to 330 MMcf/d.
Through the current Antelope Hills plant acquisition, the partnership has gained some immediate relief to capacity constraints in its Texas Panhandle operations. The partnership also expects the plant expansion project to provide support to the continuing growth in volumes from the active drilling programs by producers in its footprint in the Granite Wash.
Penn Virginia expects to complete the Antelope Hills plant expansion project in the second quarter of 2012, with plant operation starting around the same time.
Radnor, Pennsylvania-based Penn Virginia Resource manages coal and natural resource properties as well as natural gas gathering and processing businesses. The partnership’s coal properties are located in Central and Northern Appalachia, Illinois Basin and San Juan Basin.
The partnership owns and operates natural gas midstream assets located in Oklahoma and Texas, including six natural gas processing facilities having 400 MMcf/d of total capacity and approximately 4,263 miles of natural gas gathering pipelines.
Penn Virginia currently has a short-term Zacks #4 Rank (Sell). We maintain our long-term Neutral recommendation on the stock. On a competitive landscape, the partnership’s peers Alliance Resource Partners L.P. (ARLP - Snapshot Report) and Alliance Holdings GP L.P. (AHGP - Snapshot Report) with a short term Zacks #2 Rank, fare better than Penn Virginia.