Penn Virginia: Republic construction and gathering agreement amended

By Caroline Salls

Pittsburgh, Aug. 10 – Penn Virginia Corp. subsidiary Penn Virginia Oil & Gas, LP and Republic Midstream, LLC entered into a second amended and restated construction and field gathering agreement, according to an 8-K filed Wednesday with the Securities and Exchange Commission.

Penn Virginia said it was a party to the amended agreement solely for the purposes of providing a guarantee of the subsidiary’s obligations.

The company said it held discussions with holders of its senior unsecured notes regarding a restructuring of the original Republic agreement, under which Republic’s duties included the gathering and transporting of oil from leasehold acreage held by Penn Virginia Oil & Gas in south Texas’ Eagle Ford Shale via a lease-level gathering system and intermediate takeaway pipeline connecting to a downstream interstate pipeline operated by a third party.

According to the 8-K, the second amended agreement reduces Penn Virginia Oil & Gas’ minimum volume commitment (MVC) shipped to Republic to 8,000 barrels of oil per day from 15,000 but extends the MVC term to 15 years from 10 years.

The company said monthly MVC deficiencies and surpluses may be credited against each other on a rolling-12-month basis.

The amended agreement also limits Republic’s obligation to connect new wells to the gathering system to the extent they are located within specified production units, with an option to pipe or truck volumes from wells outside the core units.

In addition, the amended agreement establishes a revised fee structure, which is bifurcated between trucking and pipeline service and is reduced for the first three years then increases at intervals during the final 12 years of the MVC term. The amended fee is subject to periodic escalation based on specified increases in the New York Mercantile Exchange WTI crude oil index price, Penn Virginia said.

Penn Virginia is an oil and gas company based in Radnor, Pa. The company filed bankruptcy on May 12 in the U.S. Bankruptcy Court for the Eastern District of Virginia under Chapter 11 case number 16-32395.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.