March 22 (Reuters) - Pipeline operator Summit Midstream
Partners ( SMLP ) said on Friday it would sell its Utica assets
to a unit of midstream energy company MPLX LP ( MPLX ) for about
$625 million in cash.
The Marcellus and Utica shale, spread across Pennsylvania,
West Virginia and Ohio, are among the regions where U.S.
drillers have been cutting the number of gas rigs operating over
the last year, according to data from energy service firm Baker
Hughes.
The U.S. oil and gas rig count dropped because of a decline
in oil and gas prices, higher drilling costs and as companies
focused more on paying down debt and boosting shareholder
returns rather than increasing output.
Summit Midstream ( SMLP ), shares of which jumped about 16% before
the bell, said the assets comprise the Summit Utica natural gas
gathering system in southeastern Ohio and its equity interests
in Ohio Gathering and Ohio Condensate.
"We believe there are several value optimizing strategies to
pursue to further build scale, particularly in our Permian and
Rockies segments," the company said.
MPLX ( MPLX ) is a limited partnership formed by Marathon Petroleum ( MPC )
to focus on midstream and logistic infrastructure in key
U.S. natgas basins. It also operates Ohio Gathering and Ohio
Condensate, which it co-owns with Summit Midstream ( SMLP ).
Summit had 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.