Crestwood Midstream Partners Lp (NYSE:CMLP)
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3 Years : From Dec 2011 to Dec 2014
Crestwood Midstream Partners LP (NYSE: CMLP) ("Crestwood"), as operator and 35% owner of Crestwood Marcellus Midstream LLC ("CMM"), announced today an agreement by CMM to acquire natural gas compression and dehydration assets from Enerven Compression, LLC ("Enerven") for approximately $95 million. The assets, located on CMM's gathering systems in Harrison and Doddridge Counties, West Virginia, serve the Marcellus Shale development of Antero Resources Appalachian Corp. ("Antero"). The assets are currently operating under a five year compression services agreement with Antero and are expected to contribute approximately $11-12 million of contracted earnings before interest, taxes, depreciation and amortization ("EBITDA") to CMM in 2013. The acquisition is expected to close before December 31, 2012 and will be financed through CMM's existing $200 million credit facility.
Enerven Compression Assets
The Enerven assets, constructed in 2010-2012, include four compression and dehydration stations comprised of 31 two and three stage, reciprocating natural gas compressor units and 10 glycol dehydration units. The compressor stations receive Antero's gas production from CMM's low pressure gathering facilities for redelivery to downstream high-pressure pipelines and processing plants. CMM is acquiring 43,100 horsepower of compression designed to provide aggregate capacity of 295 million cubic feet per day ("MMcf/d") to Antero. Currently, all of the Enerven compressor stations are being fully utilized with ongoing projects to expand two of the four stations by approximately 25 MMcf/d. Antero's gas is also being compressed by third party compression not currently owned by Enerven or CMM.
"I am pleased to announce a second bolt-on acquisition in recent months as we execute our strategy to expand Crestwood's national exposure to rich gas shale plays," stated Robert G. Phillips, President and Chief Executive Officer of Crestwood's general partner. "The Enerven assets are already connected to our Marcellus gathering system and are under long term contract with Antero, our largest producer in the area. When combined with our existing assets in the Marcellus, this acquisition creates significant operating synergies, extends the value chain to Antero, offers an attractive purchase multiple and is forecasted to increase CMM's 2013 EBITDA by approximately 25%."
Update on Antero and Crestwood Marcellus Activity
As discussed in Crestwood's third quarter 2012 earnings call, Antero continues to increase its Marcellus Shale development activity and natural gas production volumes on CMM's gathering systems. Antero is currently running 6 rigs on the 127,000 acre area of dedication (Eastern AOD) under CMM's 20-year gathering and compression agreement, and up to 12 rigs in the area including the Antero leased acreage adjacent and to the west of the Eastern AOD where CMM holds a seven-year right of first offer to acquire midstream assets owned by Antero. Production volumes on the Eastern AOD have increased steadily throughout 2012 from approximately 200 MMcf/d at the beginning of 2012 to an average of 257 MMcf/d in the second quarter 2012, an average of 289 MMcf/d in the third quarter 2012 and a spot volume of approximately 376 MMcf/d on November 1, 2012. CMM currently has two major pipeline and two major compressor station projects with a combined capacity of 100 MMcf/d underway to support Antero's 2013 development program which is expected to add over 60 Marcellus Shale wells to the 100 producing wells currently connected to the CMM gathering systems.
"We are excited to expand our relationship with Antero through the Enerven acquisition which positions CMM to be both Antero's gathering company and compression company of choice in this area of the Marcellus," stated Phillips. "We believe the Enerven assets extend our value chain and provide an excellent opportunity for organic growth as gathering infrastructure in this rich gas region continues to be built at an exciting pace."
About Crestwood Midstream Partners LP
Houston, Texas based Crestwood is a growth-oriented, midstream master limited partnership which owns and operates predominately fee-based gathering, processing, treating and compression assets servicing natural gas producers in the Barnett Shale in north Texas, the Fayetteville Shale in northwest Arkansas, the Granite Wash in the Texas Panhandle, the Marcellus Shale in northern West Virginia, the emerging Avalon Shale trend in southeastern New Mexico, and the Haynesville/Bossier Shale in western Louisiana. For more information about Crestwood, visit www.crestwoodlp.com.
The statements in this news release regarding future events, occurrences, circumstances, activities, performance, outcomes and results are forward-looking statements. Although these statements reflect the current views, assumptions and expectations of Crestwood's management, the matters addressed herein are subject to numerous risks and uncertainties which could cause actual activities, performance, outcomes and results to differ materially from those indicated. Such forward-looking statements include, but are not limited to, statements about the future financial and operating results, objectives, expectations and intentions and other statements that are not historical facts. Factors that could result in such differences or otherwise materially affect Crestwood's financial condition, results of operations and cash flows including, without limitation, changes in general economic conditions; fluctuations in oil, natural gas and natural gas liquids prices; the extent and success of drilling efforts, as well as the extent and quality of natural gas volumes produced within areas of acreage dedication on and within proximity of our assets; failure or delays by our customers in achieving expected production in their natural gas projects; competitive conditions in our industry and their impact on our ability to connect natural gas supplies to our gathering and processing assets or systems; actions or inactions taken or non-performance by third parties, including suppliers, contractors, operators, processors, transporters and customers; our ability to consummate acquisitions, successfully integrate the acquired businesses, realize any cost savings and other synergies from any acquisition; changes in the availability and cost of capital; operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond our control; timely receipt of necessary government approvals and permits, our ability to control the costs of construction, including costs of materials, labor and right-of-way and other factors that may impact our ability to complete projects within budget and on schedule; the effects of existing and future laws and governmental regulations, including environmental and climate change requirements; the effects of existing and future litigation; risks related to our substantial indebtedness; and other factors disclosed in Crestwood's filings with the U.S. Securities and Exchange Commission. You should read our filings with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2011, and our most recent Quarterly Reports and Current Reports for a more extensive list of factors that could affect results.