PVR Announces Plans For East Texas / Cotton Valley Gas Processing Plant
Radnor, PA - Penn Virginia Resource Partners, L.P. announced recently that PVR's natural gas midstream subsidiary, PVR Midstream LLC, will construct a new gas processing plant and related pipelines in the Bethany Field of east Texas. In connection with the construction of the new gas processing plant, PVRM has entered into a gas gathering and processing agreement with Penn Virginia Oil & Gas Corporation (PVOG), the oil and gas exploration and production subsidiary of Penn Virginia Corporation. PVRM will provide fee-based gas processing services to PVOG, which will retain ownership of its share of the economics from the extracted natural gas liquids (NGLs) and residue natural gas. A large portion of PVOG's Cotton Valley play is located in the Bethany Field.
PVRM expects that the new plant will have initial processing capacity of 80 million cubic feet (MMcf) of natural gas per day and is expected to be placed into service in the first quarter of 2008. In addition, PVRM will construct several supporting gas and NGL pipelines to connect field gas production to the plant and to facilitate the delivery of residue gas and NGLs to various market pipelines. The plant and related facilities are expected to cost $20 to $22M, which will be funded from PVR's credit facility. The project is expected to be accretive to PVR's distributable cash flow upon completion.
Management Comment
A. James Dearlove, the Chief Executive Officer of PVR and PVA, said, "We are pleased to announce this new project. We expect PVOG to benefit by capturing the value of the liquids upgrade and PVRM will have a growing, fee-based source of revenue and cash flow while establishing a presence in the rapidly growing Cotton Valley play in east Texas. This agreement extends the natural synergies between PVRM and PVOG beyond PVRM's current marketing agreement with PVOG."
Guidance for 2007
With the exception of capital expenditures, the financial and operational results for PVRM and PVOG are not expected to be materially affected by this project during 2007. In addition, the previously provided 2007 capital expenditures guidance by PVRM included the costs of building the processing plant. Therefore, no changes have been made to previously provided guidance.
SOURCE: Penn Virginia Resource Partners, L.P.