Penn Virginia Resource Partners, L.P. announced that its midstream subsidiary has entered an agreement to sell its Crossroads natural gas gathering system and processing plant to DCP Midstream Partners, LP for approximately $63 million.
The Crossroads System, located in the southeastern portion of Harrison County in east Texas, includes approximately 8-miles of gas gathering pipeline, an 80 MMcfd cryogenic processing plant, approximately 20-miles of NGL pipeline, and a 50% ownership in an approximately 11-mile residue gas pipeline. The transaction is subject to customary closing conditions, and is expected to close on or about July 2, 2012.
Depending upon the closing date and any final purchase price adjustments, PVR expects to recognize a gain of between $30 and $33 million as a result of the transaction.
William H. Shea, Jr., Chief Executive Officer of PVR's general partner, said, "After review, we determined that these assets were no longer strategic to PVR as we focus our midstream business in the Marcellus Shale and the Panhandle region of Texas and Oklahoma. We concluded that it was in the best interests of PVR to redeploy the capital to the higher-return organic growth projects we are executing on in the Marcellus and Panhandle regions."
Acquest Advisors LLC served as exclusive financial advisor to PVR on the transaction.