EV Energy Partners LP (NASDAQ: EVEP) has signed a definitive agreement to divest its entire 21% interest in Utica East Ohio Midstream LLC (UEO) to Utica Gas Services LLC, a subsidiary of Williams Partners LP (NYSE: WPZ), for a total cash consideration of $575 million.
EVEP's net capital contribution to UEO has been $294 million. The agreement is subject to customary purchase price adjustments and closing conditions, including termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.
EVEP expects the transaction to close by the middle of July. Upon closing, EVEP intends to initially use the net proceeds of the disposition to repay all amounts outstanding under its revolving credit facility and to hold the remainder available for future activities. Availability under the revolving credit facility may be used to fund future activities, including acquisitions of oil and natural gas properties.
“This transaction, along with the previous sale of our interest in Cardinal Gas Services, reflects the completion of our divestiture of midstream investments in the Utica shale,” said Michael Mercer, EVEP president and CEO.
The other member of UEO has the right to agree to acquire EVEP's interest in UEO for the same price. If the other member exercises and closes on this right, the aggregate purchase price received by EVEP would remain the same, and Williams Partners would acquire an approximate 13% interest and the other member would acquire an approximate 8% interest.
Jefferies LLC acted as EVEP's exclusive financial advisor in connection with the pending divestiture.