In connection with the transaction, TPG will fund the next $80 million of Permian Holdco’s capital calls associated with Double E, Kallanish Energy reports.
“TPG’s commitment to fund the next $80 million of Summit’s Double E capital commitment creates significant financial flexibility and is a credit enhancing transaction for SMLP,” said Heath Deneke, president and CEO of SMLP.
Upon receipt of Double E’s Federal Energy Regulatory Commission approval, expected in the third quarter of 2020, SMLP plans to raise non-recourse commercial bank financing to fund the “substantial majority” of the SMLP’s remaining capital obligations.
SMLP expects the preferred equity financing and the bank financing will cover more than 70% of SMLP’s $350 million funding obligation associated with Double E.
Deneke said this transaction enables SMLP to shift a “significant amount” of upcoming Double E capital to third parties, freeing up cash to help strengthen SMLP’s balance sheet.
Double E Pipeline LLC is developing a 1.35 billion cubic feet per day (Bcf/d) natural gas transmission pipeline that will provide transportation service from multiple receipt points in the Delaware Basin to various delivery points in and around the Waha Hub in Texas.
Double E has secured 10-year take-or-pay volume commitments for a “substantial majority” of its initial throughput capacity. The LLC expects the line will be in service in the third quarter of 2021.