Apache, Crosstex in Gas Plant Deal

U.S.energy firm Apache Corp. (APA - Analyst Report) and Dallas-based Crosstex companies – pipeline operator Crosstex Energy L.P. (XTEX - Snapshot Report) and its general partner Crosstex Energy Inc. (XTXI - Snapshot Report) – have teamed up to build a new natural gas processing plant in the Permian Basin in West Texas. The proposed facility will process natural gas from Apache's Deadwood development in Glasscock County, Texas.   

As per the agreement between the firms, the Crosstex companies and Apache will jointly own the facility and each fund 50% of the total investment of $85 million. The initial phase of the project will include the installation of a refrigeration plant with a capacity of 20-million cubic feet per day (MMcf/d), which is expected to become operational by the fourth quarter of 2011. Subsequently, a 50-MMcf/d cryogenic gas processing facility will be added by the second quarter of 2012.    

Crosstex companies will be responsible for the construction and operation of the facilities. Additionally, it will invest $12 million to purchase and upgrade a nearby rail terminal to move natural gas liquids (NGL) to its Eunice fractionation facility in southern Louisiana.     

Crosstex Energy L.P., with a Zacks #1 Rank (short-term Strong Buy rating), is a midstream natural gas partnership that operates about 3,300 miles of pipeline, 9 processing plants, and 3 fractionators. It currently provides services for 3.2 billion cubic feet of natural gas per day, or roughly 6% of marketed domestic daily production.

Crosstex Energy Inc. – which owns the 2% general partner interest, a 25% limited partner interest and the incentive distribution rights of Crosstex Energy L.P. – is engaged in the gathering, transmission, treating, processing and marketing of natural gas. Crosstex Energy Inc. is currently rated as Zacks #3 Rank (Hold), implying that the stock is expected to perform in line with the broader U.S. equity market over the next one to three months.

Founded in 1954, Houston, Texas-based Apache is one of the world's leading independent energy companies engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. Apache currently retains a Zacks #2 Rank (short-term Buy rating).

Read the full analyst report on APA

Read the full analyst report on XTEX

Read the full analyst report on XTXI