Howard Energy to Buy Iron Horse Midstream, Adding 425 MMcfd Anadarko Plant

Howard Energy Partners (HEP) has agreed to acquire Iron Horse Midstream, adding a 425-MMcfd natural gas processing complex and about 400 miles of pipeline in Oklahoma's Anadarko Basin. Financial terms were not disclosed. HEP announced the agreement in a release on Oct. 27.

Iron Horse Midstream is a portfolio company of investment firm Sixth Street. The assets sit in Canadian, Caddo, and Grady counties in Oklahoma. The package includes:

• About 400 miles of high- and low-pressure natural gas pipelines
• Multiple compressor stations
• The 120-acre Iron Horse processing complex, with capacity of 425 MMcfd (million cubic feet per day) of natural gas

Multi-decade customer contracts underpin the acquisition. They cover roughly 167,000 dedicated acres in the basin, HEP said.

Why is HEP buying in the Anadarko?

The deal extends a two-year Midcontinent buying program. With Iron Horse included, HEP will have invested about $2.5 billion in US Midcontinent acquisitions over the past 2 years.

Herbie Goldstein, HEP's chief financial officer and head of corporate development, said the company aims to "further develop the infrastructure needed to connect this prolific basin with growing natural gas markets across Oklahoma, Texas, and the Gulf Coast."

The San Antonio, Tex.-based buyer has already closed two Oklahoma transactions this year. HEP bought the remaining ownership interest in the Midship natural gas pipeline and acquired Superior Midstream, a Tulsa-based natural gas gathering and processing company.

The three deals reshape HEP's Oklahoma position. The footprint will span nearly 2,000 miles of pipelines with about 2 bcfd (billion cubic feet per day) of capacity, 580 MMcfd of natural gas processing capacity, and 540,000 compression horsepower.

What happens next?

The transaction is scheduled to close by yearend. Closing remains subject to customary conditions and regulatory approvals.

HEP is a private energy infrastructure company. It has not disclosed the purchase price.

The watch item: regulatory clearance and a yearend close, with integration of the 425-MMcfd Iron Horse complex into HEP's 2-bcfd Oklahoma system the first operational test of the enlarged footprint.