Summit Midstream, XTO form precedent agreement in Delaware Basin

By Summit Midstream | July 30, 2018

Summit Midstream Partners has announced that it has executed a precedent agreement with XTO Energy Inc., a wholly owned subsidiary of Exxon Mobil Corp., and one of the largest leaseholders and most active producers in the northern Delaware Basin, to become a Foundation Shipper on SMLP's Double E Pipeline project ("Double E"). XTO has committed to firm transportation capacity on Double E under a 10-year take-or-pay agreement which increases to 500,000 dekatherms per day ("dth/d").

SMLP and ExxonMobil have also executed an equity option agreement, which provides ExxonMobil or an affiliate the right to become an equity partner in Double E. 

Double E is designed to provide firm interstate natural gas transportation service from various receipt points in the Delaware Basin, in New Mexico and Texas, to various delivery points around the Waha Hub.  SMLP will lead the development, permitting and construction of the project and will operate Double E upon commissioning, which is expected to occur in 2021.

Steve Newby, President and Chief Executive Officer, commented, "Today's announcement deepens and further strengthens our relationship with XTO and broadens SMLP's service offering for XTO in the Delaware Basin.  Double E Pipeline will support the full production potential of acreage in the northern Delaware Basin.  In addition to its long-term volume commitment on Double E, we are encouraged by ExxonMobil's interest in an option for equity participation in Double E." 

SMLP expects to launch a binding open season in August 2018 for 500,000 dth/d of additional firm capacity on Double E.  At the conclusion of the binding open season, SMLP will outline its final scope, cost estimate and timeline for bringing the Double E Pipeline project in service.  SMLP continues to expect that, based on shipper interest received to date, the initial throughput capacity of the Double E Pipeline will total in excess of 1.0 billion cubic feet per day. 

SMLP has received significant interest from other potential shippers regarding volume commitments and equity participation in the project.  Also, several financial parties have expressed interest in equity participation and alternative financing structures to fund SMLP's portion of the project.  SMLP is currently evaluating these alternatives.