Piper Jaffray is positive on Sanchez Energy Corp (NYSE: SN)'s monetization of its 50 percent interest in Carnero Gathering, LLC for a total of
$44 million.
Sanchez will get initial payment of $37 million, an assumption of $7.4 million of remaining capital commitments to Carnero and
future payments from Sanchez Production Partners (SPP) dependent upon meeting certain targets.
"We view as a positive transaction on the margin which should increase liquidity and slightly reduce capital obligations,"
analyst Kashy Harrison wrote in a note.
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Carnero Gathering, a JV that is 50 percent owned by Targa Resources Corp (NYSE: TRGP), will own a total of approximately 45 miles of high pressure, natural gas
gathering pipelines.
"The Carnero Gathering System will ultimately connect to a cryogenic natural gas processing plant that is under construction in
La Salle County, Texas, owned by a separate joint venture between Sanchez Energy and Targa," according to Harrison. The processing
plant is expected to be operational in early 2017.
Harrison has a Neutral rating and $8 price target on Sanchez stock, which was up 2.40 percent at $6.84 at time of writing.
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