Oct. 20, 2017

Goodnight Midstream, Callon enter contract

Goodnight Midstream has entered into a multi-year partnership to provide pipeline disposal service for Callon Petroleum Co. in the southern Delaware Basin. Goodnight will build, own, and operate a produced water pipeline connecting Callon's Spur acreage in Ward County, Texas to saltwater disposal wells in the Central Basin Platform.

Traverse Midstream Partners closes on $1.285B loan

Traverse Midstream Partners LLC has closed on a $1.285 billion senior secured term loan. The loan was upsized by $150 million from an initial loan size of $1.135 billion. Proceeds will be used to fund ongoing capital requirements associated with Traverse's 35% interest in Rover Pipeline LLC and 25% interest in Ohio River System (ORS), to retire existing Traverse indebtedness, and for general corporate purposes.

Deutsche Bank Securities Inc. and JPMorgan Chase Bank NA acted as joint lead arrangers and joint bookrunners for the term loan.

Magellan Midstream to expand Texas refined petroleum products pipeline system

Magellan Midstream Partners LP plans to expand its refined petroleum products pipeline system to handle incremental demand for transportation of gasoline, diesel fuel, and jet fuel to central and north Texas markets.

Supported by long-term customer commitments, Magellan plans to build an approximately 135-mile, 16-inch pipeline from its terminal in East Houston to Hearne, Texas. Magellan will own the newly-constructed pipeline from East Houston to Hearne via an undivided joint interest agreement with Valero Energy Corp. Magellan's ownership interest in this new pipe will provide the ability to deliver additional product north to Temple, Waco, and Dallas as well as Magellan's Midcontinent markets, including Little Rock, Arkansas. Magellan plans to reverse an existing pipeline which will connect to the new pipeline segment, providing Magellan an incremental 85,000 barrels per day of refined products capacity originating from the Houston area, for an increase of nearly 50% to service Magellan's Texas, Midcontinent, and Little Rock markets.

In addition, Magellan will make a number of enhancements to its existing pipeline and terminal infrastructure, including construction of 1 million barrels of refined products storage on a combined basis at its facilities in Dallas, East Houston and Hearne, and additional connections to third-party refineries, pipelines, and terminals within the Houston Gulf Coast region, including Magellan's new Pasadena, Texas marine terminal that is currently under construction and expected to be operational in early 2019.

Magellan currently expects to spend approximately $375 million for its share of the project, with the expanded capacity available in mid-2019, subject to receipt of necessary permits and regulatory approvals.

If warranted by additional customer demand, Magellan's pipeline capacity originating in the Houston area could be further increased.

Eureka secures $400M credit facility

Eureka Midstream LLC has closed on a $400 million senior secured revolving credit facility. The credit facility amends and restates Eureka's existing credit facility and increases the aggregate credit facility commitments from $225 million to $400 million with an extended maturity date of 4-years from the credit facility closing date. The credit facility provides a $100 million accordion whereby, under certain terms and conditions, Eureka Midstream can increase the aggregate credit facility commitments to $500 million. Use of proceeds from the credit facility will be used for funding capital expenditures, financing permitted acquisitions, funding working capital, and general corporate purposes.

ABN AMRO Capital USA LLC serves as the administrative agent and sole lead arranger under the credit facility with BBVA Compass, CIT Bank, and US Bank serving as co-documentation agents, and Citibank, Iberiabank, and Regions Bank serving as senior managing agents. Additional participating banks include BNP Paribas, Cadence Bank, Citizens Bank, East West Bank, Branch Banking and Trust Company, The Huntington National Bank, and ZB NA DBA Amegy Bank.

Simpson Thatcher & Bartlett LLP served as legal advisors to Eureka Midstream. Thompson & Knight LLP served as legal advisors to ABN AMRO Capital USA LLC.

Santa Fe Midstream begins construction in San Andres

Santa Fe Midstream LLC has commenced construction of a natural gas gathering, treating, and processing system in the San Andres play in the Permian Basin. Construction began in August 2017 and the initial natural gas facilities will be operational by the second quarter of 2018. Santa Fe is also developing a crude oil gathering system in the area. Santa Fe's natural gas and crude oil midstream facilities will be located in Yoakum, Gaines, and Cochran counties in Texas as well as Lea County, New Mexico.

Residue from the natural gas processing plant and treating facilities located near Denver City, Texas, will be delivered to El Paso Natural Gas' interstate pipeline with access to the WAHA hub and Western US natural gas markets. Natural gas liquids will be delivered to Enterprise Products' Chaparral Pipeline for transportation to Mt. Belvieu, Texas.

Stakeholder Midstream to expand in Permian Basin's San Andres

Stakeholder Midstream LLC will build a new natural gas gathering system in the Permian Basin to serve producers working in the Horizontal San Andres. The gas gathering solution includes low-pressure gathering, liquids handling, sour gas treating, cryogenic processing, and nitrogen rejection capabilities. In conjunction with its new natural gas system, Stakeholder also will expand its existing San Andres Crude Gathering System.

Stakeholder's comprehensive gas gathering, treating and processing system will include low-pressure sour gas gathering lines across Yoakum County, Texas, and into Lea County, New Mexico. To support its expanded gathering footprint, Stakeholder will construct a treating and processing facility in Yoakum County. The new facility will include front-end liquids handling, an amine treater and acid gas injection well, a cryogenic processing plant with the capacity to process 60 MMcf/d, and a nitrogen rejection unit.

Stakeholder also will expand its San Andres Crude Gathering System in Yoakum County. The crude system was fully commissioned on May 1, 2017, and currently consists of approximately 90 miles of gathering pipelines, a crude oil storage terminal, and multiple downstream pipeline connections. The expansion will include additional gathering lines, pump stations, and additions to storage capacity at Stakeholder's crude terminal. The acquisition of rights of way is underway, and the new gathering lines are expected to come into service in the first quarter of 2018.

San Antonio, TX-based Stakeholder is backed by venture capital commitments from EnCap Flatrock Midstream.

Tall Oak III to build gathering system in STACK play

Tall Oak Midstream III LLC will construct a natural gas gathering system in southeast Oklahoma's East STACK play. The system will span Hughes County and portions of Seminole, Pontotoc, Coal, Pittsburg, Atoka, and McIntosh counties.

Initially, Tall Oak III's East STACK system will consist of more than 50 miles of 12-inch to 20-inch pipeline, two compression facilities, a 5,000 bpd stabilizer, an associated slug catcher and condensate storage facilities. The system is expected to come into service by year-end. Tall Oak III expects to add a cryogenic processing facility to its East STACK system.

Tall Oak III was formed earlier this year with an initial equity commitment of up to $200 million from EnCap Flatrock Midstream and the Tall Oak III management team.

Enable Midstream to buy Align Midstream

Dallas, TX-based Align Midstream Partners, a portfolio company of Tailwater Capital, has entered into a definitive agreement to sell the company to Enable Midstream Partners LP for approximately $300 million, subject to certain customary adjustments.

Align operates a 100-million cubic foot per day cryogenic natural gas processing plant in Panola, Texas, and approximately 190 miles of natural gas gathering pipelines across Rusk, Panola, and Shelby counties in Texas and DeSoto Parish in Louisiana.

Enable's assets include approximately 12,900 miles of gathering pipelines, 14 major processing plants with approximately 2.5 Bcf/d of processing capacity, approximately 7,800 miles of interstate pipelines (including Southeast Supply Header LLC of which Enable owns 50%), approximately 2,200 miles of intrastate pipelines and eight storage facilities comprising 85.0 billion cubic feet of storage capacity.

Simmons & Company International | Energy Specialists of Piper Jaffray acted as Align's exclusive financial advisor. Locke Lord served as legal counsel to Align.

The transaction is subject to regulatory approval and closing conditions.

Magellan Midstream, Valero form JV to expand Pasadena marine terminal

Magellan Midstream Partners LP and Valero Energy Corp. noted the expansion and joint development of the marine storage facility currently under construction along the Houston Ship Channel in Pasadena, Texas. The Pasadena facility, which will handle petroleum products, including multiple grades of gasoline, diesel and jet fuel, and renewable fuels, will be owned by a limited liability company that is owned 50/50 by Magellan and Valero and will initially include 5 million barrels of storage, truck loading facilities and 2 proprietary ship docks.

Phase 1 of the facility is under construction, which includes approximately 1 million barrels of storage and a new marine dock capable of handling Panamax-sized ships or barges with up to a 40-foot draft. This first phase will now be owned by the jointly-owned company.

Further, this facility will be expanded by an incremental 4 million barrels of storage, a 3-bay truck rack and a second marine dock capable of handling Aframax-sized vessels with up to a 45-foot draft (Phase 2). After completion of this expansion, the Pasadena facility will be connected via pipeline to Valero's refineries in Houston and Texas City, Texas and the Colonial and Explorer pipelines in addition to the already planned connection to Magellan's Galena Park terminal facility.

Combined, Phases 1 and 2 of the Pasadena marine terminal are currently estimated to cost approximately $820 million, which will be funded equally by capital contributions from Magellan and Valero. With the new arrangement, Magellan's incremental capital spending will be approximately $75 million more than its previous spending estimates of $335 million for phase 1 alone. Both phases are fully contracted with long-term customer commitments.

Magellan currently serves as construction manager and will serve as operator once construction is complete. Phase 1 of the new terminal is expected to be operational in early 2019, with Phase 2 expected to come on-line in early 2020, subject to receipt of necessary permits and regulatory approvals.

If warranted by additional demand, the new Pasadena facility could be expanded to include an incremental 5 million barrels of storage, another 3 docks and expanded truck loading capacity, for a maximum footprint of up to 10 million barrels of total storage and up to 5 docks. All future expansions are expected to be owned by the jointly-owned company.