Crestwood Finalizes Acquisition Of Haynesville/Bossier Midstream Assets

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Close Date
Estimated Price
$73.0MM
Description

Acquired Tristate Sabine LLC, gaining approximately 61 miles of gas-gathering pipelines and carbon dioxide treating facilities in Sabine Parish, La., and gathering and treating contracts on the Sabine System.

Crestwood Midstream Partners LP, Houston, (NYSE: CMLP) has completed the previously announced acquisition of Tristate Sabine LLC from affiliates of Energy Spectrum Capital, Zwolle Pipeline LLC and the Tristate management. Crestwood paid $65 million at closing which was funded with available capacity under Crestwood's revolving credit facility. An additional $8 million deferred purchase payment will be paid on November 1, 2012, subject to customary post-closing adjustments.

The acquired assets include approximately 61 miles of high-pressure natural gas gathering pipelines and carbon dioxide treating facilities located in Sabine Parish, Louisiana (the Sabine System). The Sabine System provides gathering and treating services for Haynesville and Middle Bossier Shale production from the Toledo Bend South field area for redelivery to Gulf South Pipeline and Tennessee Gas Pipeline. Crestwood is also acquiring gathering and treating contracts on the Sabine System which dedicate approximately 20,000 acres under long-term, fixed-fee arrangements. System capacity is currently being expanded to 100 million cubic feet per day ("MMcf/d") for gathering and 80 MMcf/d for treating. The expansion is expected to be completed during the fourth quarter of 2011, with the final remaining cost to be largely funded from working capital acquired with the acquisition. Following the expansion, gathering volumes are expected to be approximately 60 to 70 MMcf/d.

"We are pleased to complete this acquisition which expands Crestwood into another large scale, world class shale play," says Robert G. Phillips, president and chief executive officer of Crestwood's general partner. "The Sabine System covers a highly productive core area of the Haynesville/Bossier shale play and provides producers with access to premium priced markets on the Gulf South and Tennessee Gas systems. The acreage dedicated to the Sabine System has produced some classic Haynesville/Bossier wells with large expected ultimate recoveries and high initial production rates over the past two years. Many of these wells have been choked back due to system capacity constraints which are being resolved with the current 12-inch expansion project. Additionally, recently drilled wells are being added to the system in the fourth quarter 2011, third party systems have indicated more volumes are available for delivery and new producers continue to explore acreage in the proximity of the Sabine System."

Phillips adds, "This transaction was very affordable for Crestwood with an attractive purchase price, it's immediately accretive to distributable cash flow and we are financing the transaction from current cash flow and our revolving credit facility. With approximately $195 million of unused capacity following the Tristate acquisition, Crestwood has added another great shale play to our portfolio and we have ample liquidity to fund our current 2012 capital growth plans. This is another example of the opportunities in the market to execute Crestwood's pure play, shale play growth strategy."