Howard Energy Partners Announces Acquisition of Eagle Ford Assets

June 22, 2011
Howard Energy Partners

SAN ANTONIO, June 22, 2011 – Howard Energy Partners (HEP) today announced the company has commenced operations with the acquisitions of Texas Pipeline LLC and Bottom Line Services, LLC. for a total consideration of $76 million. Crosstex Energy, L. P. ( NASDAQ: XTEX ) and Quanta Services, Inc. ( NYSE: PWR ) each provided an initial capital contribution of $35 million in exchange for an individual ownership interest of approximately 35 percent in HEP. Additional funds were provided from management of HEP, management of Bottom Line Services and private invest ors.

San Antonio-based HEP, a total-solutions energy company, provides midstream services through its newly acquired subsidiaries, Texas Pipeline, a San Antonio-based midstream owner and operator, and Bottom Line Services, a company specializing in pipeline and plant construction based in George West, Texas. Both subsidiaries currently operate primarily in the Eagle Ford Shale in South Texas.

Texas Pipeline operates 25 0 miles of large-diameter gather ing pipelines in Dimmit, Frio, Maverick and Zavala counties in the Eagle Ford and Pearsall shales. The pipeline system is in the vicinity of more than one million acres of owned and operated oil and natural gas leases. Texas Pipeline recently negotiated new long term commitments from oil and gas producer s for transportation and gathering services in Dimmit County that will extend the existing system another 30 miles by the third quarter of this year.

Bottom Line Services has successfully constructed more than 500 miles of pipeline and installed more than 70 midstream facilities including amine plants, cryogenic processing plants and compressor stations. The company has been in business since 2003 and is presently involved in more than 30 construction projects for numerous producers in the Eagle Ford Shale. Bottom Line Services’ has experienced significant growth a s a result of the growing infrastructure demands of the Eagle Ford play.

“We are pleased that this unique partnership has come together, ” said Mike Howard, Chairman and Chief Executive Officer of Howard Energy Partners. “The well-positioned assets and skilled services of Texas Pipeline and Bottom Line Services, couple d with strong financial backing and management experience, puts Howard Energy Partners in an excellent position for growth. The financial and strategic support that our capital partners can provide us as we pursue new growth platforms in the Eagle Ford, as well as other shale developments in the United States, is unrivaled. We have a strong balance sheet with over $10 million of cash in the bank and an undrawn credit facility of $20 million. In addition, Crosstex, Quanta and many others have expressed interest in investing significant new equity to back our large inventory of project developments. We feel privileged to have the opportunity to have created such a meaningful endeavor in San Antonio and look forward to a bright future. ”

“Crosstex is excited to partner with Howard Energy Partners, which provides us a new growth platform in the rapidly developing Eagle Ford Shale play. This is a new geographic area for us, and our investment is consistent with our strategy to expand outside our existing core areas. We expect our association with HEP will yield additional investment opportunities for us directly through HEP and through other ventures in the Eagle Ford and other shale developments, ” said Barry E. Davis, Crosstex President and Chief Executive Officer. “We believe HEP and Quanta will be great partners as we supplement our growth strategies and we look forward to a long-term working relationship with them. ”   

“The midstream infrastructure demands of the Eagle Ford Shale play are significant and call for a unique build-own-operate solution, ” said Jim O’Neil, president and CEO of Quanta Services. “The partnership of Howard Energy Partners, Crosstex and Quanta combines pr oven midstream development experience, project capital and deep construction and program management capabilities to deliver a total solution to the increasing infrastructure demands of the Eagle Ford Shale play. The investment in HEP also permits Quanta t o participate in the opportunity for the infrastructure growth and recurring income associated with this significant market. ”

Mike Howard, Chairman and Chief Executive Officer of HEP, most recently served as President of Midstream for Energy Transfer Partners ( NYSE: ETP ) from 2005 to 2010. Mr. Howard was responsible for the largest divisions of the company which operated 17, 500 miles of intrastate and interstate natural gas pipelines, plants and storage facilities. During his tenure, he actively participated in the growth of the company through more than $7. 5 billion of l ow risk – high return projects that were supported by long-term customer contracts. Previously, Mr. Howard was Vice President of Engineering and Operations for Crosstex Energy.

Brad Bynum will serve as President and Chief Financial Officer of HEP. Since 2 005, Mr. Bynum has served as Chief Financial Officer of Hall-Houston Exploration Partners, LLC, an offshore Gulf of Mexico exploration and production company. Prior to Hall-Houston, he was an investment banker at Merrill Lynch & Co. where he focused on the energy sector. Mr. Bynum will continue to serve Hall-Houston as a general partner. He also serves on the board of directors of Magnum Hunter Resources Corporation, a position he has held since 2006.

About Howard Energy Partners
San Antonio-based Howard Midstream Energy Partners, LLC dba Howard Energy Partners is an independent, total-solutions energy services company, owning and operating approximately 250 miles of oil and natural gas pipelines in the Eagle Ford Shale producing region in south Texas. The company’s unique structure provides value to customers by offering in-house engineering, project management, leasing, manufacturing, and construction capabilities. For more information on Howard Energy Partners, visit www.howardenergypartners.com.

About the Crosstex Energy Companies
Crosstex Energy, L. P., a midstream natural gas company headquartered in Dallas, operates approximately 3, 300 miles of pipeline, nine processing plants and three fractionators. The Partnership currently provides services for 3. 2 billion cubic feet of natural gas per day, or approximately six percent of marketed U. S. daily production. Crosstex Energy, Inc. ( NASDAQ: XTXI ) (the Corporation) owns the two percent general partner interest, a 25 percent limited partner interest and the incentive distribution rights of Crosstex Energy, L. P. Additional information about the Crosstex companies can be found at www.crosstexenergy.com.

About Quanta Services
Quanta Services, Inc. ( NYSE: PWR ), is a leading specialized contracting services company, delivering infrastructure solutions for the electric power, natural gas and pipeline and telecommunication industries. Th e company’s comprehensive services include designing, installing, repairing and maintaining network infrastructure nationwide. Additionally, Quanta licenses point-to-point fiber optic telecommunications infrastructure in select markets and offers related design, procurement, construction and maintenance services. With operations throughout North America, Quanta has the manpower, resources and expertise to complete projects that are local, regional, national or international in scope. Additional information about Quanta Services can be found at www.quantaservices.com.