Penn Virginia Resource Partners L.P. (PVR), through its midstream division PVR Midstream, has agreed to construct and operate gas gathering pipelines and compression facilities for a private firm in the Marcellus Shale of northern Pennsylvania.

Under the agreement, PVR Midstream will construct 12-inch gathering pipeline and compression facilities with 25 million cubic feet (MMcf) per day of throughput capacity for the firm’s natural gas production in Wyoming County, Pennsylvania.

PVR Midstream’s 2010 capital investment in this system is anticipated to range from $6 to $7 million, with potential future system extensions costing up to $10 million. This system is expected to become operational during the second quarter of 2010.

PVR Midstream expects the project to generate fee-based revenue and to be accretive to distributable cash flow by the third quarter of 2010.

Last week, PBR Midstream entered into a similar agreement to construct and operate gas gathering pipelines and compression facilities for Range Resources Corporation (RRC), primarily in Lycoming County, Pennsylvania.

In the agreement, PVR Midstream and Range agreed to an area of mutual interest (AMI) that covers parts of Lycoming, Tioga and Bradford Counties in north central Pennsylvania, in which Range currently holds a substantial acreage position.

Plans call for the construction of approximately 16 miles of 24- and 30-inch gathering trunklines, smaller-diameter field gathering lines and compression facilities required to gather Range’s production from the AMI, with a throughput capacity of over 700 MMcf per day. The initial phase of the project is expected to be operational in the fourth quarter of 2010.

PVR Midstream’s total capital investment in this system is anticipated to range from $170 to $200 million and will be expended between 2010 and 2015, with $35 to $40 million planned for 2010. The company expects this project to generate fee-based revenue and is expected to be accretive to distributable cash flow by the end of 2010 or early 2011.

With these agreements, PVR Midstream has established itself as an important provider of gathering and related services in the growing Marcellus Shale resource play. Going forward, Penn Virginia will continue to look for opportunities to expand its presence in this emerging and potentially large resource play.

Zacks Investment Research

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2. (PVR) Penn Virginia Resource Partners L.P. Reports Nicely Above ExpectationsPenn Virginia Resource Partners L.P. (PVR) posted adjusted net income of 49 cents per unit,...
3. (AYE) Allegheny Energy Withdraws From Virginia PATH ProjectAllegheny Energy Inc. (AYE) has requested Virginia State Corporation Commission for permission to withdraw its...
4. (PVR) Penn Virginia Resource Partners L.P. Beats but Revenues DipPenn Virginia Resource Partners L.P. (PVR) posted adjusted net income of 30 cents per unit,...
5. (MWE) MarkWest Energy Partners’ Unit Signs Gas DealsMarkWest Liberty Midstream & Resources – a majority-owned joint venture of MarkWest Energy Partners L.P....
6. (PVA) – Penn Virginia – Consensus Estimates Rise for Third Quarter and the Full YearDespite falling energy prices, estimates on oil explorer Penn Virginia continue to trend higher. The...

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