I believe this sale along with not participating in other lines confirms it is not a buyer of eureka hunter line discussed d in this post. "Will MWE buy MHR Eureka-Hunter 20" line? MWE has possibly passed on providing gathering and stabilization for Antero"
My feeling is Antero is 33/34% NG and there isn't that much money in NG or methane . Ethane is 2 years away and MWE must concentrate on NGL's where the money is now, along with other things mentioned as ratings and placing money on fractionation
Let me suggest that the sale of gathering assets to Summit rests in some part to the Fitch Ratings organization recently putting a "negative" outlook on MWE's debt due to low liquidity levels etc. Given how important gaining investment grade is to MWE and how close it is right now IMO getting $210million in cash kind of resolves the issue with Fitch. I think it highly unlikely that MWE will turn around and go into hock buying MHR pipeline assets. If anything, buying the MHR assets would leverage MWE further...
MWE sold the 40+ miles of pipelines and 2 compressor stations and the rights-of-way between Antero and their approximate 450 square miles of dedicated acerage to MWE and MWE's Sherwood complex. Summit gave MWE $210 M and took on the obligation to construct all the necessary buildout that Antero will need to get their gas to MWE's Sherwood facility. This is an opportunity for Summit to get into the big leagues and an opportunity for MWE to off-load the future buildout expenses for the Antero acreage while they keep the Antero processing for the growing Sherwood complex and at the same time pocketing $210 M to use to build more processing plants which is the business they want to be in..If anyone remembers, A few years ago MWE had an option to buy 10% of KMI's East-west pipeline and eventually rejected the option to put their money in the then budding Marcellus. When necessary MWE has sold other non-core assets to put the proceeds into the Marcellus. Now they are selling non-core Marcellus pieces to help finace the continued buildout of the Marcellus and the huge investment they will need to spend in the Utica. This deal will save MWE $10.7 M at thecurrent $3.32 annual distribution rate because they won't have to sell 3,234,252 units to get the $210 M. that they just received. It's a win-win as far as I can see.
I would guess that--Once MWE made the contract with Antero and built the pipes to connect the wells to MWE's Sherwood processing facility Antero's processing business can't go anywhere else. MWE will make the profits on the "Processuing" at their Sherwood and they now hava a new "partner" that just gave them $210M to buy up slower growth assets that will be fully used at capacity, until they have to be expanded . The MHR Eureka line I believe runs right to one of MWE's facities now so MWE probably doesn't need to buy it. MHR isn't going elsewhere. If I'm right MWE picked up $210M to build more plants and included in the sale was the right-of-way so I would assume they will have to do theexpansion of the pipes when needed and MWE will be relieved of that cost. If Summit is smart and a go-getter they can probably create a "big niche" of a business for them. The Marcellus and the Utita are bug and getting bigger and will need more players with a lot more money going forward.
No i think it MAY mean mwe will buy mhr pipeline , dodgeville dead end to south. mhr goues right thru play and connects a loop for the whole play. I think they sold pipeline to get capital for mhr pipeline, we will see.
Sentiment: Strong Buy