CNX Resources to sell gas gathering system in US for $265m

Independent natural gas exploration and production firm CNX Resources has signed an agreement to divest its 95% interest in the Shirley-Pennsboro gathering system to CNX Midstream Partners (CNXM) for $265m.

With a flowing production capacity of around 180 million cubic feet equivalent per day, the Shirley-Pennsboro System gathers and transports gas in the core wet gas region of the Marcellus Shale in West Virginia covering Doddridge, Tyler, Ritchie and Pleasant counties.

CNX currently holds the gathering system in its 95%-owned CNX Midstream DevCo III.

Upon closure of the transaction, the Shirley-Pennsboro system will be transferred to CNXM’s wholly owned subsidiary, CNX Midstream DevCo I.

CNX CEO Nicholas DeIuliis said: “For CNX, the transaction provides significant cash proceeds that effectively return the investment we made for our acquisition of Noble Energy’s general partner interest in CNXM.

“Also, in connection with the acquisition, CNX and CNXM have agreed to amend the existing gathering agreement to provide for a minimum volume commitment (MVC) with respect to the Shirley-Pennsboro System.

“For CNXM, this transaction complements the MLP’s growth outlook as previously highlighted, and demonstrates the commitment and value-creation opportunities under the new single-sponsor ownership structure.”

The transaction is part of CNX’s strategy to dropdown its assets to CNXM following the recent acquisition of Noble Energy’s GP and DevCo interests in CNXM.

Through the acquisition, CNXM will earn $400m in revenue through to 2031.

CNX holds about 21.7 million common units, or 34.2%, of CNXM’s common units.

The completion of the transaction is scheduled to take place before the end of this year’s first quarter.