An affiliate of ArcLight Capital Partners LLC intends to drop down 25% of ArcLight’s controlling interest in the Delta House semisubmersible floating production system (FPS) and associated oil and natural gas export pipelines, American Midstream Partners LP (AMID) said Aug. 10. ArcLight controls the general partner of AMID.
The FPS and pipelines are in the U.S. Gulf of Mexico (GoM).
An equity consortium led by ArcLight financed Delta House in December 2012. Delta House began operations in 2015’s second quarter, and ArcLight and AMID began formal discussions for the dropdown. AMID executives worked with ArcLight to source and execute the Delta House project. AMID’s focus is on additional, related opportunities in the eastern GoM.
The Delta House dropdown is scheduled to close before the end of the year, for $162 million. ArcLight’s remaining interest in Delta House is potentially available for future dropdowns depending on market conditions and other factors.
The transaction was approved, subject to financing and other closing conditions, by a conflicts committee on the general partner’s board of directors, and by the general partner’s full board, the company added.
Steve Bergstrom, executive chairman, president and CEO of AMID, said the dropdown will expand the company’s reach into the Mississippi Canyon’s operating core.
Delta House is operated by LLOG Exploration Offshore LLC and is in the Mississippi Canyon region of the deepwater GOM. It has nameplate processing capacity of 80,000 barrels of oil per day (Mbbl/d) and 200 million cubic feet per day (MMcf/d) of gas. Peak processing capacity is 100Mbbl/d of oil and 240MMcf/d of gas
Production is supported by tolling agreements with various producers. Delta House began operating in April, and there are six wells online. By the end of this year, eight more are scheduled to come online. Additional wells are in various stages of drilling and completion, and are scheduled to be connected to the FPS in 2016 and beyond.
Evercore Partners was the financial adviser for the conflicts committee, and also provided a fairness opinion. Thomson & Knight LLP was the committee’s legal counsel. BofA Merrill Lynch was ArcLight’s financial adviser and Latham & Watkins LLP was ArcLight’s legal counsel.
American Midstream Partners LP is based in Denver.
Recommended Reading
First US Utility-scale Offshore Wind Farm Starts Operations
2024-03-14 - The 12-turbine, 130-megawatt South Fork Wind project is a joint venture between Denmark's Orsted and New England-based electric utility Eversource.
Energy Transition in Motion (Week of Feb. 23, 2024)
2024-02-23 - Here is a look at some of this week’s renewable energy news, including approval of the construction and operations plan for Empire Wind offshore New York.
Energy Transition in Motion (Week of March 8, 2024)
2024-03-08 - Here is a look at some of this week’s renewable energy news, including a record-setting 2023 for U.S. solar.
CIP Acquires Majority Stake in Elgin, Plans $315MM Investment
2024-04-05 - Copenhagen Infrastructure Partners acquired a majority stake in Elgin Energy with plans to invest $316 million in the company.
After Challenging Year, Which Way Will Offshore Wind Blow?
2024-04-03 - Following a year of negative headlines with some of the industry’s biggest players booking billion-dollar impairments and backing out of wind projects, this year appears to be going smoother.