Gulfport Energy, Rice Energy in Utica shale joint venture

OKLAHOMA CITY -- Gulfport Energy Corp. has executed a Letter of Intent with Rice Midstream Holdings, a wholly owned subsidiary of Rice Energy, to form a midstream joint venture (JV) to develop natural gas gathering and water services assets to support Gulfport’s dry gas Utica shale development in eastern Belmont County and Monroe County, Ohio. The JV will be supported by long-term, fee-based service agreements with Gulfport.

Gulfport will own 25% of the JV and Rice will own the remaining 75%. Rice will be responsible for constructing and operating the JV’s assets:
• A dry gas gathering system with capacity to gather over 1.8 MMDth/d of natural gas consisting of approximately 165 miles of high and low pressure 12 in. – 30 in. gathering pipelines, with multiple interconnections to interstate pipelines including: Rockies Express, ET Rover, TETCO and Dominion East Ohio
• Approximately 50,000 horsepower of compression for gathering and delivery into various downstream interstate pipelines
• A fresh water distribution system designed to deliver fresh water to pads for completion activities.

Under the terms of the agreement, Gulfport will dedicate approximately 77,000 leasehold acres, including the acreage recently acquired in its Paloma Partners III, LLC and American Energy – Utica, LLC transactions. In addition, Gulfport will also contribute to the JV an existing 11-mile gas gathering pipeline and a 350 MDth/d TETCO interconnect, which are both located in Monroe County.

Gulfport and Rice plan to invest approximately $520 million to develop gathering and compression assets and $120 million for water assets within the JV over the next six years. Each partner will fund its proportionate share of the total capital investments. Initial construction of the system is expected to begin immediately, and first deliveries are planned for the middle of 2016.

Under the terms of the agreement, Gulfport shall have the right to participate on a proportionate basis in any direct or indirect sale transactions by Rice, which includes potential drop down transactions with Rice Midstream Partners LP.