Epsilon partners to build Marcellus shale gas gathering system

Epsilon Energy Ltd. and its Marcellus shale partners, Chesapeake Energy Corp. and Statoil USA Onshore Properties Inc., are to construct a 400-MMcfd natural gas gathering system to service both the three-party farmout area they share and additional producers.

The three companies signed an interim agreement for gas gathering systems in the Marcellus shale governing both current and future gathering systems for the project, in which Epsilon holds a 35% interest. Chesapeake and Statoil hold the remaining 65%.

Epsilon also sold Chesapeake and Statoil an additional 15% interest in the partnership’s existing gathering system, beyond the 50% agreed to in its initial farmout of its Marcellus interests, to better align its remaining interests with its overall involvement in the project. Epsilon built the existing gathering system in 2009 and will receive $6.5 million from this sale (OGJ Online, Feb. 26, 2009).

Chesapeake Energy completed its farmout from Epsilon, covering 11,500 net acres in Susquehanna County, Pa., in February 2010 (OGJ Online, Feb. 4, 2010).

Contact Christopher E. Smith at chriss@ogjonline.com.

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