Gulfport Energy forms JV with Rice Energy for Utica shale development in Ohio, US

Gulfport Energy has signed a Letter of Intent with Rice Midstream Holdings, subsidiary of Rice Energy, to form a midstream joint venture (JV) for natural gas gathering and water service development in Ohio, US.

The JV has been formed to support Gulfport-owned dry gas Utica Shale development in eastern Belmont County and Monroe County.

Gulfport will have a 25% equity interest in the JV for which it will sign long-term, fee-based service agreements.

With a 75% share in the JV, Rice will be responsible for construction and operation of its assets.

Assets under the JV include a dry gas gathering system which has a capacity for more than 1.8 MMDth/d of natural gas. It includes nearly 165 miles of high and low pressure 12" – 30" gathering pipelines and has interconnections with interstate pipelines including: Rockies Express, ET Rover, TETCO and Dominion East Ohio.

The firms will also place around 50,000 horsepower of compression under the JV which will be used to support natural gas gathering and for its delivery through downstream interstate pipelines.

Gulfport is expected to place around 77,000 leasehold acres of land under the JV along with an existing 11-mile gas gathering pipeline and a 350 MDth/d TETCO interconnect, both located in Monroe County.

The partners have planned to invest $520m over the next six years for the gathering and compression assets under the JV along with $120m for water assets.

Construction works for the systems are expected to start soon with first deliveries scheduled for mid 2016.

Gulfport chief executive officer and president Michael G. Moore said, "Gulfport has a strong history with Rice in the Utica Shale and we are excited to expand our relationship by creating further alignment with one of our midstream providers.

"In addition, the JV will enable Gulfport to leverage Rice’s expertise as a midstream services provider and participate in the midstream value chain through accretive opportunities with clearly defined tag-along rights that will allow Gulfport to take part in the potential drop down strategies for the joint venture and its investments."

Rice Midstream Management chief executive officer Daniel J. Rice IV said: "This joint venture will be one of the premier midstream systems in the prolific dry gas core of the Utica and adds to Rice’s attractive inventory of potential drop down candidates to Rice Midstream Partners."