American Midstream Partners LP (AMP) has opted to use, and has received approval of, its right-of-first-offer to acquire the Gonzales County, Tex., full-well-stream gathering system from an affiliate of ArcLight Capital Partners LLC for total consideration not to exceed $110 million. The deal is expected to close late this year or in early 2015.
AMP also executed an option agreement to acquire 50% interest in Republic Midstream LLC from an affiliate of ArcLight for $200 million upon the start of operations, expected in next year’s first half, from a crude oil gathering system, central delivery terminal complex, and an intermediate takeaway pipeline to serve Penn Virginia Corp.’s acreage position in the Eagle Ford.
Construction on the gathering system started in the second quarter at an estimated total capital expenditure of $100 million incurred by an affiliate of ArcLight. AMP says the initial phase of the project is expected to begin operations in the fourth quarter, and full-system operations are expected in next year’s first quarter.
The system is expected to include saltwater disposal capabilities as well as full-well-stream gathering and treating infrastructure to manage oil, gas, and water production. Total design capacity is 95,000 b/d of crude oil and water, and 15 MMcfd of natural gas.
Following the consummation of the transaction, AMP would provide midstream services under a long-term, fee-based agreement with Forest Oil Corp.
Separately, under the terms of an agreement reached in July with Penn Virginia, Republic Midstream will provide services to Penn Virginia under a long-term, fee-based transportation agreement, supported by minimum volume commitments and dedicated acreage in the area served by the gathering system.
The gathering system is expected to include 180 miles of gathering and trunk lines in north-central Gonzales and Lavaca counties delivering gathered volumes to a 144-acre storage and blending crude oil terminal in western Lavaca County.
The intermediate system is expected to consist of a 12-in., 30-mile takeaway pipeline with initial capacity of 80,000 b/d.
Prior to and after the acquisition, AMP will provide construction, operations, and general management services for Republic Midstream.