Rice Energy Inc. (NYSE: RICE) announced Feb. 12 acquired a 28-mile gathering system within the Marcellus shale of Pennsylvania from M3 Midstream LLC for $110 million in cash.
Rice Poseidon Midstream LLC, Rice Energy's wholly owned subsidiary, executed the purchase and sale agreement for the acquisition of the gathering assets in eastern Washington and Green counties, Pa., from M3 Appalachia Gathering LLC, a wholly owned subsidiary of M3 Midstream.
The northern 28-mile system in Washington County is supported by long-term contracts with acreage dedications covering 20,000 acres from third parties.
The acquisition permits the necessary rights of way in Washington and Greene counties to construct an 18-mile gathering system connecting the northern system to the Texas Eastern pipeline. Once fully constructed, the acquired systems are expected to have an aggregate capacity of over 1 billion cubic feet per day (Bcf/d).
"In addition to acquiring a strategic gathering system supported by third-party contracts, the footprint of the northern system provides us with the opportunity to accelerate development drilling and strengthen our leasing efforts in a key operational area," Daniel J. Rice IV, Rice CEO, said in the release.
The acquisition will also allow Rice to expedite the construction and in-service date of its pipeline to Texas Eastern and further improve its Washington County takeaway plan, Rice said.
The effective date of the transaction is March 1 and is expected to close in March.
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