Shares of Midcoast Energy Partners L.P. (MEP) rallied more than 4% Monday after the natural gas midstream business said it is entering the emerging Eaglebine shale play in East Texas through an acquisition and expansion project.
Specifically, the company said it sealed a deal with New Gulf Resources to acquire its midstream business in Leon, Madison, and Grimes Counties, Texas. The midstream business consists of a natural gas gathering system that is currently in operations. MEP also said it sealed agreements with Burk Royalty Co. and SEM Operating Company to build, own and operate the Ghost Chili Lateral pipeline in Houston County, Texas. The pipeline is slated to be in full service by mid-2016.
President Gregory Harper said the acquisition and expansion project will “enhance MEP’s competitive position in the Eaglebine and provide additional opportunities for accretive growth in MEP’s natural gas gathering, processing, and transportation business.”
“We are also very pleased that the contracts associated with these investments are largely volume commitment-based, which is in line with our commitment to progress MEP toward contract structures with more certain cash flows,” Harper added. In the final hour of regular trade, MEP was up 4.2% at $13.56, still moving in the lower half of the 52-week range of $11.41 to $25.13.