PVR Partners and HESS Ink Deal - Analyst Blog

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PVR Partners L.P. ( PVR ) continues to strengthen its strategic alliance with Hess Corporation ( HES ). Currently, the partnership has entered into an agreement with Hess Corp. to provide trunkline plus gathering and compression services. This project is expected to be online by the end of 2014. The estimated expenditure for this project will be in the range of $125-$150 million.

Per the agreement, PVR Partners will install a 45-mile natural gas trunkline with a diameter of minimum 20 inch. The partnership will also set up allied gathering pipelines and facilities at Hess Corp.'s lean gas production facility in eastern Ohio's Utica Shale. The trunkline will carry 450 million cubic feet of lean gas per day. The trunkline will initially connect with the Texas Eastern and Rockies Express interstate pipelines and subsequently connect with other interstate systems.

The new pipelines will cover Belmont, Jefferson and Harrison Counties, where Hess Corp. enjoys a considerable acreage position. Later, PVR Partners will own and operate the natural gas trunkline and related facilities. In addition, the partnership will also build gathering pipelines, compression stations, dehydration facilities and other associated facilities in the Utica Shale.

Initially, PVR Partners will provide services to Hess Corp. Later, the partnership intends to sign more contracts with several producers to provide capacity and gathering services.

In the current contract, PVR Partners will get service charges from Hess Corp. against providing these facilities. The fees will be calculated on the basis of volumes, thus ensuring steady revenue flow to the partnership, without commodity price risks.

Installation of a number of new pipelines will allow PVR Partners to strengthen its presence in the region and serve customers in a better way, which will subsequently increase the number of contract-awards while improving top line, going forward.

PVR Partners currently has a Zacks Rank #3 (Hold). However, other stocks from the industry that are presently performing well include Oiltanking Partners L.P. ( OILT ) with a Zacks Rank#1(Strong Buy), and SemGroup Corporation ( SEMG ) with a Zacks Rank #2 (Buy).

Radnor, Pa.-based PVR Partners owns and operates a string of natural gas midstream pipeline systems and processing plants and is also involved in the management of coal as well as natural gas properties.



HESS CORP (HES): Free Stock Analysis Report

OILTANKING PTNR (OILT): Free Stock Analysis Report

PVR PARTNERS LP (PVR): Free Stock Analysis Report

SEMGROUP CORP-A (SEMG): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: HES , OILT , PVR , SEMG

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