Strategic Midstream Operations

The Marketing & Midstream Group was formed in 2014 to more effectively manage our expanding midstream business segment. Our goal is to participate in the midstream function in order to capture more of the hydrocarbon value chain. The Marketing and Midstream Group focuses on projects that serve our production and add optionality to end markets which improves our netback price. As a secondary focus, the Marketing and Midstream Group also evaluates midstream projects that are accretive to the Company and add scale and diversification to our midstream portfolio.

In 2015 we entered into a joint venture with Targa Resources Partners LP (NYSE: NGLS) (“Targa”) to construct a new cryogenic natural gas processing plant and associated high pressure gathering pipelines near our Catarina asset in the Eagle Ford Shale. The processing plant, which will be located in La Salle County, Texas, is expected to have initial capacity of 200 million cubic feet per day (“MMcf/d”) with the ability to increase to 260 MMcf/d.

We expect the joint venture to provide significant operational and commercial benefits and improve yields, increase net-back prices, and lower the gathering and transportation fees we currently pay for our Catarina production. We have firm capacity for 125,000 Mcf/d of plant processing and associated pipeline capacity for the first five years and has dedicated the Catarina acreage and all production developed during the 15 year term. In addition, we have the option to deliver additional volumes and commit additional acreage to the new plant as production increases.

Read more about our joint venture with Targa in our October 2015 Press Release.