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SM Energy Company signs new gas services deal in Eagle Ford shale assets in South Texas.

M2 EQUITYBITES-April 12, 2011-SM Energy Company signs new gas services deal in Eagle Ford shale assets in South Texas(C)2011 M2 COMMUNICATIONS

Energy company SM Energy Company (NYSE:SM) reported on Monday that it has entered into new long-term service agreements, for the rich gas portion of its Eagle Ford shale assets in South Texas, with ETC Texas Pipeline LTD (ETC), a wholly owned subsidiary of Energy Transfer Partners LP (NYSE:ETP).

Under the agreement, Energy Transfer Partners LP will gather, transport and process production from the rich gas portion of SM Energy Company's Eagle Ford shale assets in South Texas. The deal allows ETC to construct a gathering and transportation pipeline and related facilities as well as a new processing plant, to serve SM Energy's Eagle Ford assets in South Texas.

In addition, ETC is committed to provide up to a maximum level of 240,000 MMBtu per day, or approximately 190 MMcf per day in firm commitment transportation over a ten-year term beginning in 2013. The gas will be transported through its pipeline and processed at the new plant.

According to SM Energy Company, the agreement is fee based and will not require the company to invest any upfront capital. SM Energy will be obligated to ship specified minimum amounts of gas or make periodic deficiency payments.

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Publication:M2 EquityBites (EQB)
Date:Apr 12, 2011
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