American Midstream Partners LP (AMID) announced the approval of its exercise of its right-of-first-offer to acquire the Gonzales County full-well-stream gathering system from an ArcLight Capital Partners LLC affiliate. The company also executed an option agreement to acquire a 50% interest in Republic Midstream LLC from an ArcLight affiliate.
The Gonzales county system is expected to include saltwater disposal capabilities and full-well-stream gathering and treating infrastructure to manage oil, gas and water production. Total design capacity is about 95,000 barrels per day (bbl/d) of crude oil/water and 15 million cubic feet per day of natural gas. AMID will acquire the Gonzales County system for total consideration not to exceed $110 million. Construction on the system began in second-quarter 2014 at an estimated total capex of about $100 million by an ArcLight affiliate. The first phase of the system is expected to begin operation in fourth-quarter 2014, and the system is expected to be fully operational in first-quarter 2015. AMID expects the acquisition to be completed in late 2014 or early 2015. After the transaction closes, AMID would provide midstream services under a long-term, fee-based agreement with Forest Oil Corp.
AMID also exercised its option to acquire a 50% agreement in Republic Midstream for about $200 million when operations at the crude oil gathering system, central delivery terminal complex and intermediate takeaway pipeline commence, which is expected in the first half of 2015. ArcLight committed $400 million to Republic Midstream for the system’s construction. The gathering system is expected to include 180 miles of gathering and trunk lines in north central Gonzales and Lavaca counties, Texas, for delivery to a 144-acre storage and blending crude oil terminal in western Lavaca County. The intermediate system is expected to include a 12-inch, 30-mile takeaway pipeline with an initial capacity of 80,000 bbl/d. Before and after the acquisition of the 50% interest, AMID will provide construction, operations and general management services for Republic Midstream.
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