SK Holdings to invest $250 mn in U.S. shale gas midstream firm

2018.05.21 13:19:48 | 2018.05.21 15:46:01

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SK Holdings Co., the holding entity of South Korea’s SK Group, will invest 270 billion won ($249 million) in the U.S. shale gas gathering and processing (G&P) company Brazos Midstream Holdings to reinforce its global energy business, one of its future growth engines.

SK Holdings announced on Sunday that its board approved the plan to invest 270 billion won in the Texas-based natural gas and crude oil midstream company.

“The investment in the high-performing energy firm in the Permian Basin, one of the biggest oil and gas producing regions in the U.S., would not only increase our profit in the North American business but also create a synergy effect with SK’s other energy business,” the company said.

On Monday, shares of SK Holdings rose 0.17 percent to close at 303,500 won.

As part of efforts to boost energy business, the company in October last year invested $100 million in Eureka Midstream Holdings, another shale gas G&P firm based in Texas. Eureka Midstream operates in the Marcellus and Utica shale regions, home to North America’s largest natural gas reservoirs.

SK Group expects the investment in Brazos will reinforce its energy midstream business consisting of gathering and processing. The gathering of natural gas means transporting raw natural gas produced in gas wells through pipelines, while processing refers to removing impurities and making the gas ready to be consumed by end users. The upstream services including exploration and production (E&P) are handled by the group’s oil refining unit SK Innovation, and the downstream business including distribution and retailing is run by SK Innovation and SK E&S.

SK Holdings said Brazos has stable profit sources and lower risk exposure to volatile oil and gas prices as it generates more than 80 percent of revenue from collecting fees under long-term contracts.

By Kang Doo-soon and Choi Mira

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