Summit Midstream Exits Utica Shale in $625 Million Deal with MPLX

(Reuters) — Pipeline operator Summit Midstream Partners said on Friday it would sell its Utica assets to a unit of midstream company MPLX LP for about $625 million in cash.

Summit's shares jumped about 38% to $26.88, their highest since December 2021, as crude oil-rich basins will account for more than half of the company's portfolio after the sale.

The Marcellus and Utica shale regions, spread across Pennsylvania, West Virginia and Ohio, have seen producers cut gas rigs from last year as prices linger at decades low.

"We believe there are several value optimizing strategies to pursue to further build scale, particularly in our Permian and Rockies segments," Summit CEO Heath Deneke said in a statement.

The sale will also help reduce debt and increase liquidity, adding a $400 million credit facility and more than $325 million of unrestricted cash, the company said.

The assets comprise Summit's natural gas gathering system in southeastern Ohio and its equity interests in Ohio Gathering and Ohio Condensate, operated in partnership with MPLX.

MPLX is a limited partnership formed by Marathon Petroleum to focus on midstream and logistic infrastructure in key U.S. natural gas basins.

"Its (MPLX's) experience and likely close integration with its own MPLX assets means this is likely a plug-and-play transaction. The valuation at around eight times 2024 EBITDA looks reasonable," Morningstar analyst Stephen Ellis told Reuters.

Shares of MPLX were down marginally.

Summit said last year it had engaged external advisers to evaluate strategic alternatives after receiving interest from third parties for potential deals‎, including sale of specific assets.

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