US Infrastructure and Metalmark Capital have partnered to acquire a majority interest in the Hilltop Resort Gathering System, which extends through Robertson and Leon Counties, Texas. The seller is Gastar Exploration Ltd. (AMEX: GST). No financial terms were disclosed.
US Infrastructure (“USI”) announced today it has entered into a definitive agreement with Gastar Exploration Ltd. (NYSE Amex: GST) and has acquired Gastar’s majority interest in the Hilltop Resort Gathering System. The Hilltop Resort Gathering System extends through Robertson and Leon Counties, Texas with a gathering capacity of 120 million cubic feet of natural gas per day and is connected to Gastar-operated wells which produce from the prolific middle and lower Bossier and Knowles formations in East Texas.
USI has partnered with Metalmark Capital, a leading private equity firm, to finance the transaction. In addition, Greg Sales, a well-known veteran in the midstream energy sector and formerly Chairman and CEO of Cantera Resources (a former portfolio company of the principals of Metalmark Capital), will become the Chairman of the Board of USI. Debt financing was provided by Amegy Bank, Houston, Texas.
“Russ Porter and the Gastar team have built an attractive gathering asset to which we can lend our substantial midstream marketing expertise and perspective. USI will offer its top-quality transportation and related services to ensure the deliverability of their gas to attractive markets,” said Gil Burciaga, CEO of USI. “We are also excited to have Greg Sales join our board as Chairman and to be working with Metalmark Capital as our equity partner in this transaction.”
“Having participated in the midstream business for more than 30 years, I am excited to be a part of USI’s platform and to assist with the company’s growth and acquisition strategy,” added Greg Sales. “Gil is a well respected operator in the midstream sector and he and his team have significant experience in managing midstream assets.”
“The sale of our stake in the Hilltop system provides additional liquidity to pursue our drilling plans in East Texas and the Marcellus Shale while maintaining a very low level of leverage,” said Russ Porter, Gastar Chairman, CEO and President. “We have a longstanding and successful relationship with the principals of USI and we look forward to continuing to build on this strategic affiliation as they become our new gathering partner.”
About US Infrastructure LP
US Infrastructure LP is a growth-oriented independent midstream energy partnership that was recently formed to acquire, develop and operate natural gas midstream infrastructure, including natural gas gathering and processing assets. USI is led by Gilbert Burciaga, a founding member of DYNEGY, Inc. (formerly Natural Gas Clearinghouse) and the former President of NGC Energy Resources, Dynegy’s midstream division. For more information please visit www.usilp.com or email firstname.lastname@example.org.
About Metalmark Capital
Metalmark Capital is a leading private equity firm whose principals have a long track record of successful investing in targeted sectors, with particular focus and competence in energy and natural resources, industrials and healthcare. Metalmark Capital seeks to build long-term value through active and supportive partnerships with the companies and management teams in which they invest. Metalmark Capital is an investment center of Citi Capital Advisors. For more information, please visit www.metalmarkcapital.com.