American Midstream Partners LP has agreed to acquire interests in certain subsidiaries of Southcross Holdings LP and merge Southcross Energy Partners LP into a wholly owned subsidiary in two separate deals valued at $815 million, including the repayment of net debt. The moves create a partnership with an enterprise value of $3 billion.
American Midstream said the deals accelerate its transformation into an integrated natural gas gathering, processing, and transmission partnership while building full value chain participation in gathering, treating, processing, fractionation, and NGL and gas marketing.
Southcross Energy’s assets are in South Texas, Mississippi, and Alabama and include 3,100 miles of pipeline. Its integrated South Texas system consists of 2,000 miles and 890 MMcfd of pipeline, 500 MMcfd of processing capacity from the Lone Star and Woodsboro cryogenic plants, and the 22,000-b/d Bonnie View fractionator.
Southcross Holdings’ indirectly owned assets, which are concentrated in South Texas, encompass the 550-mile, 90-MMcfd Lancaster gas gathering system and an NGL system consisting of 100 miles of pipeline and the 63,000-b/d Robstown fractionator.
The South Texas facilities serve increasing regional demand for Eagle Ford production from new and expanding petrochemical complexes, LNG export projects, and exports to Mexico, as well as growing industrial demand along the US Gulf Coast, American Midstream said.
Upon completion of the deals, American Midstream will own and operate midstream infrastructure representing:
• 8,000 miles of crude oil, natural gas, and NGL pipelines.
• 2.5 bcfd of gas transmission capacity.
• 10 processing plants with 1 bcfd of capacity.
• Six fractionation facilities with 111,500 b/d of capacity.
• 35.7% of the Delta House floating production facility in the deepwater US Gulf of Mexico.
• 6.7 million bbl of above-ground liquids storage capacity.
The deals are expected to close in next year’s second quarter.
Public unitholders of Southcross Energy Partners will receive 0.16 of a common unit of American Midstream for each Southcross Energy Partners common unit, representing a 5% premium to the 20-day volume weighted average exchange ratio as of Oct. 30.
American Midstream is buying interests in certain Southcross Holdings’ subsidiaries that directly or indirectly own 100% of the limited liability company interests of the general partner of Southcross Energy and 55% of the Southcross Energy common units.
American Midstream’s busy year
American Midstream said it also plans to divest an additional $400-500 million of noncore assets to solidify its balance sheet and allocate growth capital toward organic gathering and processing assets.
An active year thus far for the company began with the completion of its merger with JP Energy Partners LP, which resulted in a $2-billion master limited partnership with primary operations in the Permian, Eagle Ford, Bakken, and US gulf (OGJ Online, Oct. 24, 2016).
American Midstream during the summer advanced its push to build a “deepwater supersystem” in the Mississippi Canyon region by agreeing to acquire the 107-mile Viosca Knoll gathering system from Genesis Energy LP, buy Panther Asset Management LLC and its gulf presence, form Cayenne Pipeline LLC alongside Targa Midstream Services LLC to transport Y-grade NGLs on the Gulf Coast, and sell its propane marketing and services business to SHV Energy NV (OGJ Online, July 24, 2017).
More recently, the company participated in pair of dropdowns, buying an additional 15.5% interest in Delta House and an additional 17% interest in the 1.2-bcfd Destin Pipeline from affiliates of private equity sponsor ArcLight Capital Partners LLC, which controls American Midstream’s general partner.
Delta House, which is operated by LLOG Exploration Offshore LLC and connects to the Destin Pipeline, can process up to 100,000 b/d of crude and 240 MMcfd of gas and liquids.
Contact Matt Zborowski at [email protected].
