MIDSTREAM NEWS

BCP closes inaugural energy services fund

Bernhard Capital Partners Management LP (BCP) has closed its debut private equity fund, BCP Energy Services Fund LP. The fund plans to invest in North American service companies across the midstream, downstream and power verticals. Atlantic‐Pacific Capital served as exclusive global placement agent and Kirkland & Ellis served as legal counsel for the Fund. Launched in 2014, BCP has raised over $750 million in capital commitments.

Discovery, Old Ironsides Partner

Discovery Midstream Holdings LLC has partnered with Old Ironsides Energy LLC, an independent oil and gas investment manager, to pursue midstream infrastructure acquisition and greenfield development opportunities across North America. Formed in 2015, Discovery is a full-service midstream company based in Dallas.

Spectra Energy, TransCanada to build natural gas pipeline to Mexico

Spectra Energy Corp. and TransCanada Corp. have been chosen to build, own, and operate natural gas infrastructure pipeline from Texas to Tuxpan, Veracruz, Mexico. The $3.6 billion project will be used to supply North American shale gas to power plants in Mexico.

Spectra Energy subsidiary Valley Crossing Pipeline LLC was awarded a 168-mile intrastate natural gas pipeline project by the Comisión Federal de Electricidad (CFE) - Mexico's state-owned utility - to provide natural gas transportation services beginning in 2018.

Valley Crossing will construct and operate a header system of more than 5 billion cubic feet per day near the Agua Dulce Hub in Nueces County, Texas, as well as a 2.6 bcf/d pipeline originating at that header and extending to Brownsville, Texas. There, the pipeline will connect with the Sur de Texas - Tuxpan pipeline, which will extend into Tuxpan, in the state of Veracruz in Mexico.

TransCanada's joint venture with IEnova, Infraestructura Marina del Golfo (IMG), has been chosen to build, own and operate the US$2.1 billion Sur de Texas-Tuxpan natural gas pipeline in Mexico. The project will be supported by a 25-year natural gas transportation service contract for 2.6 billion cubic feet a day with CFE.

The bid for the Sur de Texas-Tuxpan project was presented in partnership with IEnova, a subsidiary of Sempra Energy. TransCanada will develop, operate and own 60% of this project, with IEnova owning 40%.

TransCanada expects to invest approximately US$1.3 billion in the partnership to construct the pipeline and anticipates an in-service date of late 2018.

In addition to a connection with CENAGAS's pipeline system in Altamira, the project will interconnect with TransCanada's Tamazunchale and Tuxpan-Tula pipelines as well as with other transporters in the region.

EnLink to expand in Midland Basin

A subsidiary of EnLink Midstream Partners LP and EnLink Midstream LLC will construct a new crude oil gathering system, called the Greater Chickadee crude oil gathering project, in Upton and Midland counties in the Permian Basin. The partnership will invest approximately $70 million to $80 million to build Greater Chickadee, which will include over 150 miles of high- and low-pressure pipelines that will transport crude oil volumes to several major market outlets and other key hub centers in the Midland, Texas, area. The initial phase of Greater Chickadee will be operational in the second half of this year with full service expected early next year.

Greater Chickadee is supported by long-term, fee-based agreements with Permian Basin producers. The project includes approximately 35,000 dedicated acres in Upton County. Current production from this dedicated acreage is over 10,000 barrels per day.

SemGroup to acquire Rose Rock

SemGroup Corp. will acquire all of the outstanding common units of Rose Rock Midstream not already owned by SemGroup in an all stock-for-unit transaction at a ratio of 0.8136 SemGroup common shares per Rose Rock common unit. The implied Rose Rock unit price represents a 7.4% and 19.2% premium to its volume-weighted average prices during the 10-trading days and 20-trading days ending May 27, 2016, respectively.

Following completion of the transaction, SemGroup is targeting an 8% compound annual dividend growth rate and dividend coverage of 1.5 times or greater through 2018.

The transaction is subject to the approval of the SemGroup shareholders and common unitholders of Rose Rock. SemGroup owns 56% of the Rose Rock common units, which is sufficient to approve the transaction on behalf of the holders of Rose Rock common units. Rose Rock will no longer be publicly traded and related IDRs will be eliminated. Subject to customary approvals and conditions, the transaction is expected to close in the third quarter of 2016.

"The transaction simplifies the corporate capital structure and is expected to improve the entity's cost of capital," noted Brian Kessens, managing director and portfolio manager at Tortoise Capital Advisors in a Tortoise podcast following the announcement.

Barclays and Citi acted as financial advisors and Gibson, Dunn & Crutcher LLP acted as legal counsel to SemGroup. Potter Anderson & Corroon LLP acted as legal counsel to the SemGroup board. Evercore Group LLC acted as financial advisors and Akin Gump Strauss Hauer & Feld LLP and Morris, Nichols, Arsht & Tunnell LLP acted as legal advisors to the Conflicts Committee of the general partner of Rose Rock.