UPDATE 1-Summit Midstream Partners to sell Utica assets to MPLX for $625 mln

Reuters
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March 22 (Reuters) - Pipeline operator Summit Midstream Partners said on Friday it would sell its Utica assets to a unit of midstream energy company MPLX LP for about $625 million in cash.

The Marcellus and Utica shale, spread across Pennsylvania, West Virginia and Ohio, are among the regions where U.S. drillers have been cutting the number of gas rigs operating over the last year, according to data from energy service firm Baker Hughes.

The U.S. oil and gas rig count dropped because of a decline in oil and gas prices, higher drilling costs and as companies focused more on paying down debt and boosting shareholder returns rather than increasing output.

Summit Midstream, shares of which jumped about 16% before the bell, said the assets comprise the Summit Utica natural gas gathering system in southeastern Ohio and its equity interests in Ohio Gathering and Ohio Condensate.

"We believe there are several value optimizing strategies to pursue to further build scale, particularly in our Permian and Rockies segments," the company said.

MPLX is a limited partnership formed by Marathon Petroleum to focus on midstream and logistic infrastructure in key U.S. natgas basins. It also operates Ohio Gathering and Ohio Condensate, which it co-owns with Summit Midstream.

Summit had said last year it had engaged external advisers to evaluate strategic alternatives after receiving interest from third parties for potential deals‎, including sale of specific assets.

(Reporting by Vallari Srivastava in Bengaluru; Editing by Shilpi Majumdar)

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