Penn Virginia Corp. (NYSE:PVA) has agreed to sell substantially all of its Eagle Ford Shale natural gas midstream assets to a newly-formed affiliate of ArcLight Capital Partners LLC for gross cash proceeds of $100 million.
Gross proceeds of the sale are at the high-end of guidance as the company had previously been expecting $75 million to $100 million and analysts at Jefferies LLC modeled a potential sale occurring in 2Q14 with gross proceeds of $80 million.
The assets to be sold include a natural gas gathering and gas lift system including approximately 119 miles of pipelines and associated facilities located in Gonzales and Lavaca Counties, Texas.
Net of its partners' interest in the gross proceeds from this sale, Penn Virginia intends to use the remaining proceeds of approximately $95 million to help fund its 2014 capital expenditure plan and to pay down debt. Pro forma year-end '14 net debt / EBITDA is 2.8x, unchanged from Jefferies' previous estimate that included $80 million in gross proceeds.
Acquest Advisors LLC served as PVA's financial advisor in connection with the transaction.
H. Baird Whitehead, president and CEO, stated, "The divestiture of our natural gas midstream assets is the first step in a series of potential divestitures which will reduce our indebtedness, improve our liquidity and fund further investment in our oily Eagle Ford Shale play."
Granite Wash and Selma Chalk properties are expected to be marketed for sale next year and could fetch combined proceeds of $125 million that could be used to add a sixth operated rig to its Eagle Ford operations, noted the analysts.
The sale of the Eagle Ford midstream assets is expected to close during the first quarter of 2014 and is subject to customary closing conditions.