MOODY'S: ENERGY WOES TRICKLE TO MIDSTREAM

Moody's Liquidity Stress Index (LSI) jumped to 6.1% in October from 5.8% in September, the index's highest level since March 2010, as commodity prices remained under pressure in the energy sector, the rating agency said in its Nov. 3 SGL Monitor Flash. The oil and gas LSI continued to swing higher, to 19.2% in October from 16.9% in September, as liquidity ratings for four energy companies were lowered to SGL-4. Downgrades have been more concentrated in E&P and, more recently, oilfield services. However, the downgrade of Azure Midstream Energy LLC (B3 negative), a provider of natural gas services including gathering and transportation, indicates that lower drilling and throughput volumes are starting to be felt along the distribution chain.

SHELL MIDSTREAM PARTNERS ACQUIRES PECTEN MIDSTREAM

Shell Midstream Partners LP has agreed to acquire Pecten Midstream LLC, which owns Lockport Crude Terminal (Lockport) and Auger Pipeline System (Auger), for $390 million from Shell Pipeline Company LP, a wholly owned subsidiary of Royal Dutch Shell plc.

Auger is a 174-mile offshore Gulf of Mexico pipeline system that transports crude from producers in eastern Garden Banks and Keathley Canyon blocks. It shares a complementary strategic connection to Poseidon through SMI 205. Lockport is a crude storage terminal facility located southwest of Chicago with two million barrels of storage capacity that feeds regional refineries, while also offering strategic trading opportunities.

The acquisition price reflects an approximate 8.6 times multiple of the assets' forecasted 2016 adjusted earnings before interest, taxes, depreciation and amortization. The acquisition will be effective October 1, 2015 and is expected to be immediately accretive to unitholders. In connection with the acquisition, Shell Midstream Partners increased its total borrowing capacity under its revolving credit facilities to $580 million.

Shell Midstream Partners expects to fund the acquisition with proceeds from a capital markets transaction, borrowings under existing revolving credit facilities, cash on hand, or a combination thereof.

In its 3Q2015 report, the master limited partnership formed by Royal Dutch Shell reported net income attributable to the partnership of $54.3 million, which equates to $0.37 per limited partner unit. Shell Midstream Partners also generated adjusted earnings before interest, income taxes, depreciation and amortization of $57.1 million and cash available for distribution of $46.4 million.

ENLINK MIDSTREAM ACQUIRES FULL OWNERSHIP OF DEADWOOD FACILITY

EnLink Midstream Partners LP's subsidiary has acquired a 50% ownership interest in the Deadwood natural gas processing facility from a subsidiary of Apache Corp. The cost of the accretive acquisition was approximately $40 million.

The facility is located in Glasscock County, Texas, in the Permian Basin. Pursuant to a 2011 agreement, EnLink and Apache jointly funded the development of a new-build processing facility in which each company held a 50% undivided ownership interest. EnLink managed the plant's initial construction, and has operated the facility since its startup.

The plant has a capacity of 58 million cubic feet per day (MMcf/d), and is currently processing approximately 45 MMcf/d. The acquisition brings EnLink's net processing capacity in the Permian Basin to 343 MMcf/d, excluding the Riptide processing plant, which is currently under construction and will add another 100 MMcf/d of processing capacity in the Midland Basin.

TRANSCANADA TO BUILD US$500M NATURAL GAS PIPELINE IN MEXICO

TransCanada Corp. has been chosen to build, own, and operate the Tuxpan-Tula Pipeline in Mexico. Construction of the pipeline is supported by a 25-year natural gas transportation service contract with the Comisión Federal de Electricidad (CFE), Mexico's state-owned power company.

TransCanada expects to invest US$500 million in the 36-in.-diameter pipeline and anticipates an in-service date in the fourth quarter of 2017. The pipeline will be 250 kilometers (155 miles) long and have contracted capacity of 886 MMcf/d.

The pipeline will originate in Tuxpan in the state of Veracruz and extend through the states of Puebla and Hidalgo, supplying natural gas to CFE combined-cycle power-generating facilities in each of those jurisdictions, as well as to the central and western regions of Mexico. The pipeline will serve new power-generation facilities and those currently operating with fuel oil which will be converted to use natural gas as their base fuel. Construction is expected to start in 2016.

Today, TransCanada also owns and operates the Tamazunchale and Guadalajara pipeline systems and is completing construction of the Topolobampo and Mazatlán pipelines. By 2018, with the Tuxpan-Tula Pipeline, TransCanada will have five pipeline systems, with approximately US$3 billion invested in Mexico.

USD PARTNERS COMPLETES ACQUISITION OF CASPER TERMINAL

USD Partners LP has completed its acquisition of the Casper, Wyoming, crude oil terminal for total consideration of $225 million.

The Casper terminal assets include a unit train capable rail loading terminal, 900,000 barrels of tank capacity for storage and blending operations and a pipeline connection from Spectra Energy Partners LP's Express crude oil pipeline, currently the primary source of crude oil delivered to the terminal.

The Casper terminal is supported by take-or-pay contracts with primarily investment grade refiners and is expected to contribute approximately $26 million of Adjusted EBITDA in 2016 based on minimum contracted payments. The transaction is expected to be immediately accretive to distributable cash flow per unit.

In addition, on Nov. 13, the partnership amended its senior secured credit agreement to increase its borrowing capacity from $300 million to $400 million, supported by the partnership's existing lenders and by the addition of Goldman Sachs Bank USA. The partnership also reset its ability to request an additional $100 million of incremental revolving credit facility commitments, subject to receiving increased commitments from lenders or other financial institutions and satisfaction of certain conditions. All other terms and conditions of the existing agreement remained unchanged.

QGC, PARTNERS INVEST $1.2B TO BOOST GAS OUTPUT IN QCLNG PROJECT

QGC Pty Ltd., along with joint venture partners China National Offshore Oil Corp. and Tokyo Gas, will invest $1.2 billion (AUD 1.7 billion) for development of its natural gas tenements west of Wandoan to support gas production for the Queensland Curtis liquefied natural gas (LNG) project in Australia.

The investment, which follows receipt of Commonwealth and State Government environmental approvals, has been approved by QGC's parent company BG Group and the joint venture partners.

BG Group's share of the investment is within the Group's previously disclosed capital expenditure program. QGC has a 73.75% interest in the relevant natural gas tenements.

The development, known as Charlie, involves the construction of 300-400 wells, a large field compression station, and associated pipelines and facilities that will feed into existing gas processing and water infrastructure at Woleebee Creek. The works are part of the continuous development of QGC's tenements in the Surat Basin to sustain natural gas supply to both domestic customers and the two-train Queensland Curtis LNG (QCLNG) liquefaction plant on Curtis Island, near Gladstone. The QCLNG plant has delivered 62 cargoes since first LNG production in December 2014.

SADDLEHORN, GRAND MESA COMBINE PROJECTS FOR DJ BASIN PIPELINE

Saddlehorn Pipeline Co. LLC is combining projects with Grand Mesa Pipeline LLC for the construction of a 20-in. undivided-joint-interest pipeline that begins 20 miles north of Saddlehorn's Platteville, CO, origin at a junction near Grand Mesa's Lucerne, CO, origin. The pipeline will deliver various grades of crude oil from the DJ Basin to storage facilities in Cushing, OK.

As part of the undivided joint interest, Saddlehorn and Grand Mesa will share in the costs for the pipeline, which is currently under construction. The initial capacity of the pipeline is expected to be 340,000 b/d, with Saddlehorn owning 190,000 b/d of capacity and Grand Mesa owning 150,000 b/d. Saddlehorn and Grand Mesa will be responsible for their own commercial activities. Saddlehorn has the option to expand the maximum capacity of the pipeline to more than 450,000 b/d at its sole discretion and cost. Grand Mesa will retain ownership of its previously acquired pipeline easements from Lucerne to Cushing for the potential future development of transportation projects involving petroleum commodities other than crude oil and condensate. With the consent and participation of Saddlehorn, the parties may consider future opportunities using these easements for projects involving the transportation of crude oil and condensate.

Saddlehorn will own origin points at Platteville (including one million barrels of storage) and Carr, CO, as well as the pipeline segment from Carr to the Lucerne junction. Grand Mesa will own origin points both at Lucerne and Riverside, CO, as well as the pipeline segment between Lucerne and Riverside. Saddlehorn is owned 40% by Magellan Midstream Partners LP, 40% by Plains All American Pipeline LP, and 20% by Anadarko Petroleum. Grand Mesa is owned 100% by NGL Energy Partners LP.

Magellan is serving as construction manager and operator. Saddlehorn expects to spend $650 million for its share of the undivided-joint-interest pipeline and the additional assets it will own, compared to previous spending estimates of up to $950 million for a comparable project scope. When the pipeline is placed into service, operating costs will be allocated to Saddlehorn and Grand Mesa based on their proportionate ownership interest and throughput.

NBLX DELAYS IPO

Due to market conditions, Noble Midstream Partners (NBLX) will delay its planned IPO. The anticipated sale price of $19.00 to $21.00 implied a valuation of 17x to 19x EBITDA, noted Stifel analysts following the announcement.

"Removing the expected $270 million proceeds of the IPO from our 4Q15 forecast causes our YE15 and YE16 debt/TTM EBITDA estimates to increase to 2.7x and 2.5x from 2.6x and 2.4x, respectively," the analysts noted, saying that "While the incremental de-leveraging would have been modestly positive, the IPO delay is not a surprise given the expected price range relative to current midstream valuations and has little impact on our estimates."

MIDSTREAM NEWS

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