Kinder-Copano Grows in Eagle Ford


Eagle Ford Gathering LLC continues to expand its reach for producers in the prolific South Texas region. In this regard, Kinder Morgan Energy Partners, L.P. (NYSE:KMP - News) and Copano Energy, L.L.C. (NasdaqGS:CPNO - News) – the owners of Eagle Ford Gathering LLC – have entered into long-term joint venture (:JV) agreements to provide midstream services to two hydrocarbon explorers.

As per the deal, Eagle Ford Gathering LLC will provide transportation, processing and fractionation services to Petrohawk Energy Corporation (:HK) plus a subsidiary of Rosetta Resources Inc. (NasdaqGS:ROSE - News), Rosetta Resources Operating LP.

Under the agreement with Petrohawk, Eagle Ford Gathering will offer services of up to 50,000 million British thermal units (MMBtu) per day of natural gas production from the Eagle Ford leases in LaSalle and McMullen Counties, Texas.

On the other hand, the agreement with Rosetta calls for services of the same production volume from leases in Webb and Dimmit Counties, Texas. Both agreements will have a term of 10 years.

The Eagle Ford is a shale rock formation located in many counties in South Texas.  Midstream service providers in the region, like Eagle Ford Gathering, are experiencing strong demand from producers for additional capacity.

The JV is evaluating natural gas capacity expansion measures from the Eagle Ford play. Including the latest deals with Petrohawk and Rosetta, the leading Eagle Ford explorers, Eagle Ford Gathering now has a total of 550,000 MMBtu per day of the shale’s natural gas production under contract.

Last month, Eagle Ford Gathering entered into a long-term agreement to provide midstream services to Williams Partners L.P. (NYSE:WPZ - News) at the Markham processing plant. The deal entitles the JV to build a seven-mile, 20-inch lateral for processing Eagle Ford Shale production at Williams Partners’ Markham plant in Matagorda County, Texas.

Kinder Morgan is the largest independent owner and operator of petroleum-product pipelines in the U.S. It is one of the largest publicly traded master limited partnerships (NYSE:MLP - News) and generally serves as a benchmark for the pipeline MLP group. The partnership competes with Enterprise Products Partners L.P. (NYSE:EPD - News) and Energy Transfer Partners L.P. (NYSE:ETP - News).

Its collaborator in the JV, Houston-based Copano Energy is a natural gas based midstream service provider with operations in Oklahoma, Texas, Wyoming and Louisiana.

Both Kinder Morgan and Copano shares currently retain the Zacks #3 Rank, which translates into a short-term Hold rating.

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