Legacy Reserves LP has set its sights on East Texas, dropping a total of $440 million on natural gas properties from Anadarko Petroleum and Western Gas Partners LP.
The master limited partnership announced Monday that the purchase nabbed it a wealth of assets, including 567 miles of high- pressure pipeline and low-pressure gathering lines as well as 502 million cubic feet equivalent processing plant linking to five major gas markets.
With these new additions, Legacy expects its production to increase by 70 million cubic feet equivalent per day in the third quarter.
“This acquisition represents a material entry into East Texas, a region we have wanted to enter for several years due to its long-lived, low-decline, low-cost nature and high potential for bolt-on acquisitions,” Legacy President and CEO Paul Horne stated. “These high-quality assets combined with the upside optionality of recompletions and a contango gas-curve make this a very attractive acquisition for us.”
Despite the company’s status as a newcomer to the gathering and processing aspect of natural gas production, Horne said he is confident in his company’s newest venture.
“We believe these assets will provide a stable cash flow stream and some synergies with our upstream assets that would not exist with an outside operator,” Horne said. “Given the meaningful immediate and long-term accretion to distributable cash flow per unit from this acquisition and our concurrent announcement with TSSP, the future looks bright for Legacy.”