Crosstex Energy Buys Clearfield Energy for Utica Assets

Crosstex Energy, L.P., a midstream natural gas company headquartered in Dallas, TX that operates approximately 3,300 miles of pipeline, ten processing plants and four fractionators, wants a piece of the Utica Shale action and announced they are buying out privately-held Clearfield Energy to get it.

From the Crosstex press release:

The Crosstex Energy companies, Crosstex Energy, L.P. and Crosstex Energy, Inc. today announced they have signed a definitive agreement to acquire privately held Clearfield Energy, Inc. for approximately $210 million in cash at closing subject to certain adjustments. Clearfield is a 125-year-old crude oil, condensate and water services company with operations in Ohio, Kentucky and West Virginia. Clearfield currently moves approximately 30 percent of the oil production in Ohio and provides a solid entry into the Utica Shale play where major producers have acquired significant acreage positions. This acquisition is expected to be immediately accretive to distributable cash flow.

Clearfield’s assets include a 4,500-barrel-per-hour crude oil barge loading terminal on the Ohio River, a 28,000-barrel-per day crude oil rail loading terminal on the Ohio Central Railroad network which is expected to expand to a 56,000-barrel-per-day facility by end-of-year, and 200 miles of crude oil pipelines in Ohio and West Virginia. The assets also include 100,000 barrels of above ground storage, six existing brine water disposal wells with two under development and an extensive fleet of trucks with a total capacity of 35,000 barrels per day. In addition, Clearfield owns more than 2,500 miles of unused right of way.

The transaction further diversifies the Partnership’s asset base in terms of geography and service offerings, representing an important strategic step for the Partnership into crude and condensate services. As Utica Shaleproduction expands, the Partnership plans to leverage Clearfield’s first-mover position in crude and condensate services in the region, which will drive further growth. The Partnership believes its core capabilities and strong financial position will enable it to leverage Clearfield’s strategically positioned assets and operational platform to accelerate growth. This platform will better enable the Partnership to compete for natural gas gathering and processing opportunities in the emerging Utica Shale play.

“We are extremely pleased to reach an agreement to acquire one of the largest midstream service businesses in Ohio, West Virginia and Kentucky,” said Barry E. Davis, Crosstex President and Chief Executive Officer. “It is a big step in the execution of our strategy to grow and diversify our business, providing a new geographic footprint and expanded service offerings for us. Clearfield provides Crosstex with an entrance in the rapidly developingUtica Shale play, which we believe will be a strong, sustainable growth platform for us. We believe we can build upon Clearfield’s many years of great customer service and are confident in the ability to grow the business as a first mover in this rapidly developing region.

“Looking ahead, we will continue to focus on maximizing the earnings and growth of our current assets as we enhance scale and diversification to create value for our investors and our customers,” Davis added.

Financing and Approvals

The Partnership plans to fund this transaction through a combination of debt and equity. The transaction, which is expected to be completed in July 2012, is subject to the satisfaction of customary closing conditions, including applicable regulatory approvals, if any.*

*Crosstex Energy (May 8, 2012) – Crosstex Energy Agrees to Acquire Clearfield Energy, Inc.

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