Callon Petroleum Co. (NYSE: CPE) closed on the sale of its natural gas gathering system in the southern Delaware Basin to Fort Worth, Texas-based Brazos Midstream Holdings LLC, Brazos said Oct. 10.
As part of the deal, Brazos signed a long-term, fee-based agreement with Callon for gas gathering and processing services for acreage under development in Ward and Pecos counties, Texas.
Callon is a Permian Basin pure-play E&P headquartered in Natchez, Miss. The company currently operates four rigs across its four core operating areas covering about 60,000 net acres in the region, according to its October investor presentation.
Joe Gatto, CEO and president of Callon, said in a statement that the company expects the transaction with Brazos to support its current plans for "robust growth across our Delaware Basin footprint."
Though the terms of the transaction weren't disclosed, the deal also positions Brazos as one of the largest private natural gas and crude oil midstream companies in the Delaware, according to the company's press release.
Including the Callon dedication, Brazos’ midstream infrastructure is anchored by long-term acreage dedications covering roughly 240,000 acres with "top-tier" Permian operators, the company said.
"The acquisition of these strategic assets builds upon our existing franchise position and provides a platform for growth in an area we know well," Stephen Luskey, chief commercial officer of Brazos, said in a statement.
The acquired natural gas gathering system will connect to Brazos' existing system and the previously announced Comanche II natural gas processing plant. When complete in January, the company's total operated processing capacity will be 260 million cubic feet per day.
In addition, Brazos said it's accelerating plans to build a third natural gas processing plant, Comanche III, to meet continued volume growth in the region. The company has secured a site for the plant and will begin construction in early 2018.
"We look forward to a long-term partnership with Callon and other producers as we grow in one of the most promising regions in our industry," Luskey added.