NiSource Gas Transmission and Storage, a subsidiary of
NiSource Inc
. (
NI
), announced its business wing, Midstream & Minerals Group, LLC
has entered into a joint venture program with affiliates of Hilcorp
Energy Company to diversify their operations in northeast Ohio and
western Pennsylvania.
The joint agreement is aimed at developing a potential hydrocarbon
resource base at the Utica/Point Pleasant shale formations.
Construction of gathering pipeline infrastructure and natural gas
liquids processing units are also on the cards under this
venture. For the first stage of the joint program, capital
investment of roughly $300 million is planned for later this year.
As per the combined venture, named Pennant Midstream, LLC, 50 miles
of gathering pipeline is to be constructed with output capacity of
400 million cubic feet (mcf) per day. Additionally, investment will
be made for the development of a natural gas cryogenic processing
plant with production capacity of 200 mcf per day.
Under the upstream joint agreement, NiSource will combine its
acreage area with Hilcorp's to form a substantial acreage block in
Utica. The project is expected to commence its operations by 2013.
NiSource has a non-operating working ownership in the total
acreage, with Hilcorp serving as the operator.
The venture will solidify NiSource's position in the midstream
business and enable the company to meet the critical needs of the
producer customers. We view this project as a profitable addition
to NiSource's extensive asset base.
The venture is expected to yield returns from the latter half of
2013 which will complement NiSource's strategy of sustainable
long-term growth. The company's transmission business reported
revenue of $409.2 million in the first quarter 2012, compared with
$402.9 million in the year-ago quarter.
NiSource has steadily been involved in investment activities for
expanding its business. Its recent $220 million, West Side
expansion project will provide accessibility to other markets thus
increasing its coverage area. The company's proposed capital
investment of $4 billion over a five-year period is anticipated to
ensure operational flexibility.
The company retained its earnings guidance for 2012 in the range of
$1.40 per share to $1.50 per share. The Zacks Consensus
Estimates for the second quarter and 2012 are 20 cents per share
and $1.45 per share, respectively.
The Utica Shale is one of the fastest-growing natural gas
development regions attracting major energy companies like
Hess Corp
. (
HES
) and
Chesapeake Energy Corp
. (
CHK
).
Based in Merrillville, Indiana, NiSource is involved in natural gas
transmission, storage and distribution, as well as electric
generation, transmission and distribution business. The company's
operation stretches from the Gulf Coast through Midwest to New
England. The company presently retains a Zacks #3 Rank, which
translates to a short-term Hold rating.
CHESAPEAKE ENGY (CHK): Free Stock Analysis
Report
HESS CORP (HES): Free Stock Analysis Report
NISOURCE INC (NI): Free Stock Analysis Report
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