Teak gathers and processes natural gas in the Eagle Ford Shale of south Texas, the company said in a statement today.
Atlas, based in Moon Township, Pennsylvania, will take over 540 miles (869 kilometers) of gathering pipelines, an existing 200 million cubic-foot-per-day treatment plant and a similar- sized plant that is under construction, according to the statement.
It will also own 50 percent to 70 percent of Teak’s joint venture with TexStar Midstream Services LP, whose assets include 235 miles of pipeline and a co-generation plant.
The Eagle Ford Shale is a dense rock formation that stretches 400 miles by 50 miles across South Texas. Companies including EOG Resources Inc. (EOG) and Anadarko Petroleum Corp. (APC) produced 374,000 barrels of oil from the field in January and 1.2 billion cubic feet of gas, according to state regulators. Teak also has operations in Louisiana and Kansas.
The purchase will boost Atlas’s earnings before interest, taxes deductions and amortization to as much as $500 million in 2014, according to the statement.
Atlas may be able to triple the Teak system’s size, Chief Executive Officer Eugene Dubay said in the statement.
Atlas Pipeline Chairman Edward Cohen was CEO of a predecessor company, Atlas Energy (ATLS) Inc., which Chevron Corp. acquired for about $3.6 billion in 2011.
Matthew Skelly, Atlas’s vice president for investor relations, didn’t immediately return a voice mail seeking comment.
Citigroup was Atlas Pipeline’s financial adviser on its purchase of Teak. Jones Day and Ledgewood provided legal advice. Teak was advised by Evercore Partners Inc. (EVR)
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