American Midstream Partners LP (NYSE: AMID) acquired assets from an affiliate of DCP Midstream LLC through a purchase and sale agreement, American Midstream said July 14.
For about $115 million, the Mobile Bay gas processing plant, the Dauphin Island gathering/transmission system, and interest in the Main Pass oil gathering system were acquired, the company said.
The Mobile Bay plant processes 300 million cubic feet per day (MMcf/d) of gas, the Dauphin Island system can handle about 1 Bcf/d, and the Main Pass system can handle about 160 Mbbl/d of oil, the company noted.
The acquisition “complements” the company’s High Point system in South Louisiana, and supports its shallow-water and deepwater drilling projects in the Gulf of Mexico, the company said.
A private placement of common units should fund the acquisition, the company said, noting that the acquisition is scheduled to close in August.
“We are excited to acquire assets that complement and enhance our current offshore gas gathering and transmission business in the eastern Gulf of Mexico,“ said Steve Bergstrom, the executive chairman, president and CEO.
”The acquisition is consistent with our growth strategy to pursue third-party and bolt-on opportunities,and upon closing the acquisition we will have the ability to offer oil gathering and natural gas processing services to offshore producers, which will allow us to more effectively compete for deepwater Gulf of Mexico production,” he added
“Drilling and permitting activity in this region of the Gulf continues to increase after the end of the drilling moratorium, and we are well-positioned to capture incremental volume. As a result of this accretive acquisition, management intends to recommend to the board of directors an increase to the quarterly distribution of three to five percent for the fourth quarter 2014 distribution,” he concluded.
Additionally, American Midstream detailed financial updates.
Its updated adjusted EBITDA forecast for the year is in the $44 million to $47 million range, the company said, noting that the update factors in the asset acquisition’s related costs
Growth capex for the remainder of the year, excluding money for maintenance, is now in the $65 million to $70 million range, the company said. This increase reflects work on the Lavaca natural gas gathering system, American Midstream noted.
Denver-based American Midstream Partners LP operates domestically.
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