APL to Acquire Eagle Ford Midstream for $1 Billion

Source: www.gulfoilandgas.com 4/16/2013, Location: North America

Atlas Pipeline Partners, L.P. (APL, Atlas Pipeline, or the Partnership) announced that the Partnership has executed a definitive agreement to acquire 100% of the equity interests of TEAK Midstream, L.L.C. (TEAK), a privately owned midstream operator, for $1 billion in cash. TEAK is a natural gas gathering and processing company with assets located in the core of the Eagle Ford Shale, a liquids-rich, highly prolific oil and gas area of south Texas. The transaction is expected to close in the second quarter of 2013 and is subject to certain regulatory approvals and customary closing conditions.


The assets being acquired include a 200 MMcfd cryogenic processing plant ("Silver Oak I"), 265 miles of 20"-24" high pressure rich gas gathering lines with 750 MMcfd of throughput capacity, and a second 200 MMcfd cryogenic processing plant ("Silver Oak II"), which is expected to be delivered to the Partnership for installation in May of 2013 and be in service during the first quarter of 2014.

Total capital expenditures associated with the build-out of Silver Oak II and other projects are expected to be approximately $100 million over the next year. Approximately 80% of TEAK's current gross margin is derived from fixed fee contracts, with the majority of those volumes under minimum volume commitments. Pro forma for the transaction, the overall cash flow mix to the Partnership is expected to be over 50% fixed fee by the end of 2014.

The Partnership expects further expansion of the acquired Eagle Ford assets beyond 2014, including the potential to add a third 200 MMcfd processing facility and additional gathering pipelines among other projects.

Management will discuss the acquisition on the first quarter earnings call scheduled for April 30, 2013 Eugene Dubay, Chief Executive Officer of the Partnership, commented, "We are very excited about the acquisition of TEAK Midstream. We have been looking at the Eagle Ford shale for a number of years and are fortunate to have found what we believe is the ideal entry point. TEAK's assets are the highest quality and best positioned for growth with minimal capital requirements. The assets are new, highly efficient, and are located in the heart of one of the most prolific plays in North America.

The addition of the TEAK assets will not only diversify the Partnership's cash flows by adding a highly attractive new area of operations, but it has a large amount of embedded organic growth, which could more than triple the size of the complex, as it looks today. This purchase fits well with our strategy of having scale as a gathering and processing midstream company in highly attractive, liquids-rich areas with significant producer activity and organic growth opportunities. We would like to welcome all of the employees from TEAK to Atlas Pipeline and also thank all of our stakeholders for their continued support."

Upon the closing of this transaction, the Partnership will own 100% of the following TEAK assets:

200 MMcfd of cryogenic processing capacity;
A second 200 MMcfd cryogenic processing facility to be in service in the first quarter of 2014
265 miles of primarily 20" to 24" gathering and residue lines with 750 MMcfd of throughput capacity; and
275 miles of low pressure gathering lines

Additionally, the Partnership will acquire a 50%-75% interest in various joint venture agreements that currently exist between TEAK and TexStar Midstream Services, L.P. ("TexStar"). It is anticipated that the Partnership will be the operator of the joint venture assets following the transaction, which include:

235 miles of pipeline, including rich gas gathering, header, and residue pipelines;
3 miles of NGL pipeline; and
A Co-Gen facility, which will produce power for the Silver Oak complex as well as the ability to sell power to third-parties and back to the grid during peak season

As previously mentioned, the Silver Oak processing complex is expected to expand in early 2014 by installing a new 200 MMcfd facility, the Silver Oak II plant, and potentially expand further thereafter by adding an additional 200 MMcfd facility. Any expansions will be 100% owned and operated by Atlas Pipeline.

Atlas Pipeline has secured financing for the acquisition through a $400 million Series D Convertible Preferred issuance ("Preferred") as well as through committed bank financing from Citigroup and Wells Fargo. The Preferred issuance will pay distributions in the form of incremental additional Preferred units that equal the common equity yield at the time of each quarter's record date plus a specified premium. The Preferred is convertible to common limited partner units at the Partnership's option after the first anniversary of the issuance, and mandatorily convertible into common limited partner units end of eight full calendar quarters following the issuance. Upon conversion, the Preferred units will covert to common limited partner units on a one-to-one basis.

For more information about related Opportunities and Key Players visit Oil Shale Projects

United States >>  6/10/2022 - Schlumberger and Subsea 7 announced that the Subsea Integration Alliance has been renewed for another seven years. ...
United States >>  6/1/2022 - Subsea 7 today announced the award of a sizeable(1) contract by Chevron for the development of the Ballymore project offshore US Gulf of Mexico, in wa...

United States >>  5/30/2022 - Fugro services will support both inshore and offshore towing of the 24,000-ton structure as it leaves the coast of Texas and travels 800 km to the Vit...

Related Categories: Coalbed Methane  General  Heavy Oil  Methane Clathrate  Oil Sands  Oil Shale  Shale Gas  Tight Gas  Tight Oil 

Related Articles: Coalbed Methane  General  Heavy Oil  Methane Clathrate  Oil Sands  Oil Shale  Shale Gas  Tight Gas  Tight Oil 

Gulf Oil and Gas
Copyright 2021 Universal Solutions All rights reserved. - Terms of Service - Privacy Policy.