Crestwood Midstream Partners LP (Crestwood), as operator and 35% owner of Crestwood Marcellus Midstream LLC (CMM), announced that on December 28, 2012, CMM completed the acquisition of natural gas compression and dehydration assets from Enerven Compression, LLC (Enerven) for $95 million. The transaction was funded under CMM’s existing $200 million revolving credit facility and is expected to contribute approximately $11 million to $12 million of earnings before interest, taxes and depreciation (EBITDA) to CMM in 2013.
The acquisition includes four Enerven compressor stations which are connected to CMM’s low pressure gathering systems in Harrison County, West Virginia and a five-year minimum term Compression Services Agreement with Antero Resources Appalachian Corp. (“Antero”), CMM’s largest producer in the Marcellus Shale Region. The Enerven compressor stations have current capacity of approximately 300 million cubic feet per day (MMcf/d), which is being fully utilized by Antero’s existing Marcellus Shale production. As a part of the transaction, Enerven will complete station expansions and unit replacements to support additional Antero production requirements and provide day-to-day operations during a 90 day transition period. As an important benefit of the transaction, post-transition, CMM will retain Enerven’s Marcellus operations personnel to support its growing gathering and compression business in the area.
Going forward, CMM will provide compression services to Antero under both the Enerven Compression Services Agreements, which expire in 2018, and the 20-year CMM Antero Gathering and Compression Agreement (the “CMM Antero Contract”), which commenced in January 2012. It is expected that when the Enerven Compression Services Agreements expire, services to Antero from the Enerven assets will continue under the CMM Antero Contract. Both agreements provide for comparable fixed service fees with annual escalators and annual volumetric throughput obligations by Antero. CMM plans to construct at least two additional compressor stations in 2013 for Antero under the CMM Antero Contract, expanding total CMM gathering capacity by approximately 100 MMcf/d to 500 MMcf/d. Current spot volumes on the CMM gathering systems were approximately 390 MMcf/d to 400 MMcf/d at year-end 2012. Additionally, CMM and Antero are currently discussing additional compression services required in Antero’s Doddridge County acreage, which is currently being developed.
“We are pleased to complete this bolt-on acquisition which adds substantial 2013 EBITDA and expands the value chain and range of services we can offer Antero and other producers in the Marcellus region,” stated Robert G. Phillips, Chairman, President and Chief Executive Officer of Crestwood’s general partner. “This is another example of the high-growth potential of our Marcellus assets now that CMM has an established, competitive position in this fast-growing rich natural gas play,” concluded Phillips.
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