American Energy to spin off, rename another unit

American Energy–Midstream LLC, a unit of Oklahoma City-based American Energy Partners LP (AEP), is transitioning to a standalone company and will change its name to Traverse Midstream Partners LLC. The moves will be effective July 1.

Traverse Midstream has been capitalized by a $500 million equity commitment provided by The Energy & Minerals Group (EMG), and additional equity provided by Aubrey K. McClendon, chairman and chief executive officer of AEP and chairman of Traverse Midstream, as well as other members of AEP management and affiliated parties of McClendon.

The company holds 35% interest in Rover Pipeline LLC, a 710-mile interstate natural gas pipeline company serving the Marcellus and Utica shale plays (OGJ Online, Oct. 31, 2014); and 25% interest in the Ohio River System, a 52-mile, 36-in. gas gathering trunkline. Both will be operated by Energy Transfer Partners LP, and are expected to be in service by mid-2017 and third-quarter 2015, respectively.

Earlier this month, AEP reported plans to spin off and rename American Energy Appalachia Holdings LLC, which will be called Ascent Resources LLC.

Those moves, expected to be completed by yearend, followed Ascent subsidiary American Energy–Utica LLC agreeing to sell 35,000 net acres and certain associated gathering assets to Gulfport Energy Corp. for $407 million in cash (OGJ Online, June 10, 2015), and completing a combined equity and debt financing of $977 million consisting of $250 million of equity invested by affiliates of EMG, First Reserve, and McClendon, as well as $250 million of senior secured debt.

AEP says the combined proceeds of $1.4 billion will provide Ascent with $700 million of immediate liquidity after repaying certain existing debt. Ascent plans to deploy this capital for ongoing development of its assets.

Pro forma for the asset sale, Ascent as of Mar. 31 had estimated proved reserves of 1.8 tcf, 73% of which is natural gas, and 235,000 net acres in the Utica and Marcellus. The company’s current estimated production is 280 MMcfed.

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