Williams seeks approval for Atlantic Sunrise expansion
Williams says that Transco, a wholly owned subsidiary of Williams Partners LP, has filed an application with the US FERC seeking authorization for its Atlantic Sunrise expansion project, which would transport about 1.7 bcf/d of natural gas to markets in the Mid-Atlantic and Southeastern US. Williams expects to place Atlantic Sunrise into service in the second half of 2017 as part of $4.8 billion in transmission projects planned to come online through 2017. Williams Partners' net investment in the Atlantic Sunrise project is expected to be approximately $2.1 billion.
ECP makes equity commitment in Next Wave Energy
Private equity firm Energy Capital Partners has committed up to $500 million in equity capital to Next Wave Energy Partners LP. Next Wave will use the capital to focus on the development, operation, acquisition, and expansion of midstream and downstream petrochemical and fuels assets. Members of Next Wave's senior management joined in the investment.
EV Energy Partners to divest Utica East Ohio interest for $575M
EV Energy Partners LP has signed a definitive agreement to divest its entire 21% interest in Utica East Ohio Midstream LLC (UEO), to Utica Gas Services LLC, a subsidiary of Williams Partners LP, for total cash consideration of $575 million. EVEP's net capital contribution to UEO has been approximately $294 million. The agreement is subject to customary purchase price adjustments and closing conditions, including termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.
EVEP expects the transaction to close by the middle of July 2015. Upon closing, EVEP intends to initially use the net proceeds of the disposition to repay all amounts outstanding under its revolving credit facility and to hold the remainder available for future activities. Availability under the revolving credit facility may be used to fund future activities, including acquisitions of oil and natural gas properties.
The other member of UEO has the right to agree to acquire EVEP's interest in UEO for the same price. If the other member exercises and closes on this right, the aggregate purchase price received by EVEP would remain the same, and WPZ would acquire an approximate 13% interest and the other member would acquire an approximate 8% interest.
Baird Equity Research analysts view the deal as positive, but note the need for a gas rally in 2016. The $575 million price tag represents a 15.1x EBITDA multiple, and the deal comes "sooner and better-priced than the 11x we had modeled for 1Q16," the analysts said in a note to investors following the announcement. "The $11/unit value is above the $6/unit we had previously used in our valuation. Yet, we estimate $3.50/Mcf gas, $65/bbl oil, and an accretive acquisition all would be required to maintain the current distribution in 2016 when hedges roll," they explained.
Jefferies LLC acted as EVEP's exclusive financial advisor in connection with the pending divestiture.
Nuevo Midstream Dos secures $400M equity commitment from EnCap Flatrock
Nuevo Midstream Dos LLC (Nuevo Dos) has secured an initial equity commitment of $400 million from EnCap Flatrock Midstream and the Nuevo Dos management team.
Nuevo Dos was formed earlier this year by the team that led its predecessor company, Nuevo Midstream LLC (Nuevo), which was also backed by EnCap Flatrock. After developing a midstream footprint in the Delaware Basin, Nuevo was sold to Western Gas Partners LP in October 2014 for $1.5 billion.
Nuevo Dos was advised by Locke Lord LLP. EnCap Flatrock was advised by Thompson & Knight LLP.
Nuevo Dos is pursuing organic and acquisition opportunities across North America.
Riverstone commits up to $300 million to Meritage III
Meritage Midstream Services III LP (Meritage III), a newly formed, Denver, Colorado-based midstream partnership, has received an equity commitment of up to $300 million from funds managed by energy private equity firm Riverstone Holdings LLC to pursue midstream opportunities in Western Canada's emerging resource plays. The initial Riverstone commitment of $100 million includes $67 million from Riverstone Global Energy and Power Fund VI and $33 million from Riverstone Energy Ltd.
Pemex, First Reserve ink US$1B cooperation agreement
Petroleos Mexicanos (Pemex) and First Reserve, a global private equity and infrastructure investment firm exclusively focused on energy, have signed a US$1 billion agreement to mutually invest in energy infrastructure for Mexico.
The first of such investments, in the Los Ramones pipelines, was announced in March. Construction on the expected 744 kilometers of natural gas pipelines has begun and full commercial operations are expected in mid-2016.
ONEOK Partners, Fermaca to construct export pipeline from West Texas to Mexico
ONEOK Partners LP has entered into a 50-50 joint venture with a subsidiary of Fermaca Infrastructure BV, a Mexico City-based natural gas infrastructure company, to construct a pipeline that would transport natural gas from the Permian Basin in West Texas to Mexico.
The Roadrunner Gas Transmission pipeline project extends from ONEOK Partners' ONEOK WesTex Transmission natural gas pipeline system at Coyanosa, Texas, west to a new international border-crossing connection at the US and Mexico border near San Elizario, Texas, where it will connect with Fermaca's Tarahumara Gas Pipeline.
The project, to be constructed in phases, includes 200 miles of new 30-inch-diameter pipeline currently designed to transport up to 640 million cubic feet per day (MMcf/d) of natural gas, with up to 570 MMcf/d to be transported to Mexico's growing markets. Precedent agreements representing the initial design capacity have been executed with the Comisión Federal de Electricidad (CFE), Mexico's national electric utility, and a subsidiary of Fermaca. All transportation agreements will be firm (take-or-pay) and have a term of 25 years. Roadrunner was fully subscribed in its initial design through an open season process that ran from Dec. 2, 2014, to Dec. 26, 2014. Additional capacity could become available through future expansions depending on the demands of the market.
The first phase of the pipeline project for 170 MMcf/d of available capacity is expected to be completed by the first quarter of 2016. The second phase, which will increase the pipeline's available capacity to 570 MMcf/d, is expected to be completed in the first quarter of 2017. The third and final phase of the project is expected to be completed in 2019 and will increase available capacity on the pipeline to 640 MMcf/d. ONEOK Partners will manage the construction of the project and will be the operator of the pipeline upon its completion. The estimated cost of the project is $450 million to $500 million.
ONEOK WesTex Transmission is an intrastate natural gas pipeline system operating within Texas, consisting of approximately 2,227 miles of pipeline.
The project is subject to receipt of customary governmental approvals.
EnLink completes VEX acquisition in dropdown transaction with Devon
EnLink Midstream Partners LP has completed its acquisition of the Victoria Express Pipeline and related truck terminal and storage assets (VEX) from Devon Energy Corp. for $210 million - $220 million. The VEX pipeline is a 56-mile multi-grade crude oil pipeline with a current capacity of approximately 50,000 b/d, and, following completion of current expansion projects, it will have capacity of approximately 90,000 b/d. Other VEX assets at the destination of the pipeline include an eight-bay truck unloading terminal; 200,000 barrels of above-ground storage, of which 50,000 barrels are under construction; and rights to barge loading docks. Also included in the transaction are facilities near the origin of the pipeline that are under construction, including an eight-bay truck unloading terminal and 160,000 barrels of above-ground storage.
"[Devon] had previously pointed to this transaction as one lever it could pull for additional liquidity and had indicated it as a likely 1H:15 event. The proceeds plug the small cash flow gap we had previously forecast of ~$100MM and come in at the high end of our expectation of $150MM-$200MM," said Global Hunter Securities analysts following the announcement of the transaction in late March.
Dominion Midstream Partners acquires Dominion Carolina Gas Transmission
Dominion Midstream Partners LP has acquired Dominion Carolina Gas Transmission LLC from Dominion Resources Inc. for approximately $495 million. Dominion Midstream is issuing approximately $200 million of limited partnership units to Dominion and has entered into a two-year note with Dominion for the remaining $295 million in transaction consideration.
The addition of Dominion Carolina Gas Transmission is expected to be immediately accretive to Dominion Midstream's distributed cash flow per unit. This transaction supports the partnership's intention to grow distributions to unitholders at a compounded annual growth rate of about 22% per year through the end of the decade.
HEP expands into Marcellus
Howard Midstream Energy Partners LLC, dba Howard Energy Partners, has executed a definitive purchase and sale agreement with Southwestern Energy Co. to purchase the company's northeast Pennsylvania natural gas gathering assets in Bradford and Lycoming counties in Pennsylvania for $500 million. The gathering systems, serving the Marcellus shale region, include 100 miles of natural gas gathering pipeline, with nearly 600 MMcfd of capacity. In addition to the existing systems, HEP plans to design, construct, and operate a new natural gas gathering system for Southwestern Energy Co. in Tioga County, PA. Once fully operational, the new system is expected to add up to 380 MMcf/d of capacity in the area.The transaction is expected to close in the second quarter of this year. San Antonio, TX-based HEP plans to open an office in PA upon the transaction's closing.
Erickson wins Mexico pipeline construction contract
Erickson Inc., a global provider of aviation services, has contracted with Group Desarrollo Infaestructura, SA de CV (GDI), who is contracted with Transcanada Corp.'s Mexican subsidiary, Transportadora de Gas del Noreste, for a new rural infrastructure pipeline project to bring natural gas to Mexico. The agreement will guarantee the use of an S-64 E Aircrane to assist in the external load transport of more than 1,000 natural gas pipeline segments that will complete the 329 mile long Topolobampo Project. The terrain surrounding the project is rugged and mountainous with minimal ground access. To avoid road construction and reduce transit time, pipe segments will be transported by helicopter from a centralized staging area to multiple sites along the pipeline.
