American Midstream Announces Acquisition of Incremental Delta House Interest and Expects 2016 Adjusted EBITDA at Higher End of Range
-
Partnership increases interest in Delta House floating production
system to 20.14%
-
Strategically adds to American Midstream's leading offshore-to-onshore
Gulf Coast system
-
Additional Delta House ownership is accretive to 2016 EBITDA and
distributable cash flow
-
Expects 2016 Adjusted EBITDA to be at higher end of range
American Midstream Partners, LP (NYSE: AMID) (“Partnership”) announced
today the simultaneous acquisition and closing of additional minority
interests in Delta House, a fee-based, semi-submersible floating
production system (FPS), and associated oil and gas pipelines in the
Gulf Coast, bringing its total equity interest to 20.14%. The
Partnership acquired the additional interests from Red Willow Offshore
LLC, LLOG Bluewater Holdings LLC, and Ridgewood Energy Corporation
(“Acquisition”) for total consideration of approximately $49 million.
The Acquisition is immediately accretive to Adjusted EBITDA and
distributable cash flow and is part of the Partnership’s strategy to
build a portfolio of complementary assets across multiple strategic
basins. As such, Delta House is directly connected into the Destin and
Okeanos pipelines, two strategically located pipelines which the
Partnership will be operating this quarter. The integration of the
combined assets offers increased service to the Partnership’s customers
while capturing additional value for unitholders by transporting natural
gas and liquids from wellhead through take-away pipeline.
“We are pleased with the performance of Delta House and the associated
strong returns since our initial acquisition. We continue to see
substantial resource development where the production growth and
producer economics in the Gulf of Mexico are exceeding expectations. To
take advantage of significant future production growth, we have decided
to increase our investment. We are excited about further integrating
this strategic asset as part of our long-term Gulf Coast strategy,”
stated Lynn Bourdon III, Chairman, President and Chief Executive
Officer. “Delta House is a world-class offshore production handling
facility which contributes significant long-term, fee-based cash flows
backed by large, well-capitalized integrated oil companies.”
Transaction Funding
The acquisition of additional Delta House interests is accretive to
distributable cash flows and further strengthens the Partnership’s
leverage profile. The acquisition was funded with the issuance of $35
million, or 2.33 million, Series D convertible preferred units issued to
affiliates of ArcLight Capital, LP and approximately $14 million in
borrowings under the Partnership’s revolving credit facility. The
preferred equity was issued at $15 per unit and will receive preferred
distributions equal to the greater of $0.4125 per unit or the
distribution paid to the common unitholders. Prior to June 30, 2017, at
the option of the Partnership, units can be redeemed at their
liquidation value; plus, accrued distributions. After June 30, 2017,
ArcLight may cause the Partnership to issue an out-of-the-money warrant
agreement for the right to acquire up to 700,000 common units at a
strike price of $22 per unit.
Financial Guidance
As a result of continued strong performance of American Midstream’s
existing assets, the Partnership expects to be at the higher end of
previously announced 2016 Adjusted EBITDA guidance.
Delta House Overview
Delta House is operated by LLOG Exploration Offshore, L.L.C. and is
located in the highly prolific Mississippi Canyon region of the
deep-water Gulf of Mexico. The facility has 100,000 barrels of crude oil
and 240 million cubic feet of natural gas and liquids per day of peak
processing capacity. Cash flows for Delta House are supported by
long-term volumetric-tiered fee-based tariffs with ship-or-pay
components and life-of-lease dedications with investment grade, well
positioned counterparties. Delta House commenced operations in April
2015 and currently has eleven wells online. The eleventh well tie-back
was online in mid-October and brought the FPS to peak capacity.
Producers are continually evaluating additional tie-backs that would
likely keep Delta House operating at peak capacity, enabling strong
returns for the foreseeable future.
About American Midstream Partners, LP
Houston-based American Midstream Partners, LP is a growth-oriented
limited partnership formed to own, operate, develop and acquire a
diversified portfolio of midstream energy assets. The Partnership
provides midstream services in Texas, North Dakota, and the Gulf Coast
and Southeast regions of the United States. For more information about
American Midstream Partners, LP, visit www.americanmidstream.com.
About ArcLight Capital Partners, LLC
ArcLight is one of the leading private equity firms focused on North
American energy infrastructure investments. Since its establishment in
2001, ArcLight has invested approximately $17 billion across multiple
energy cycles in 99 transactions. Headquartered in Boston,
Massachusetts, the firm’s investment team brings extensive energy
expertise, industry relationships, and specialized value creation
capabilities to its portfolio. More information about ArcLight, as well
as a complete list of ArcLight’s portfolio companies can be found at www.arclightcapital.com.
Non-GAAP Financial Measures
This press release includes financial measures in accordance with U.S.
generally accepted accounting principles, or GAAP, as well as non-GAAP
financial measures, including “Adjusted EBITDA.”
We define distributable cash flow as Adjusted EBITDA, less cash paid for
interest expense, normalized maintenance capital expenditures, and
distributions related to the Series A, Series C and Series D convertible
preferred units. The GAAP financial measure most comparable to
distributable cash flow is Net income (loss) attributable to the
Partnership.
Forward-Looking Statements
This press release includes forward-looking statements. These statements
relate to, among other things, projections of 2016 financial
performance, operational volumetrics and improvements, growth projects,
cash flows and capital expenditures. We have used the words
"anticipate," "believe," "could," "estimate," "expect," "intend," "may,"
"plan," "predict," "project," "should," "will," "potential,"
"line-of-sight," and similar terms and phrases to identify
forward-looking statements in this press release. Although we believe
the assumptions upon which these forward-looking statements are based
are reasonable, any of these assumptions could prove to be inaccurate
and the forward-looking statements based on these assumptions could be
incorrect. Our operations and future growth involve risks and
uncertainties, many of which are outside our control, and any one of
which, or a combination of which, could materially affect our results of
operations and whether the forward-looking statements ultimately prove
to be correct. Actual results and trends in the future may differ
materially from those suggested or implied by the forward-looking
statements depending on a variety of factors which are described in
greater detail in our filings with the SEC. Construction of growth
projects is subject to risks beyond our control including cost overruns
and delays resulting from numerous factors. In addition, we face risks
associated with the integration of acquired businesses, decreased
liquidity, increased interest and other expenses, assumption of
potential liabilities, diversion of management’s attention, and other
risks associated with growth and acquisitions, if consummated. Please
see our Risk Factor disclosures included in our Annual Report on Form
10-K for the year ended December 31, 2015, filed with the SEC on March
7, 2016, and Form 10-Q for the quarter ended June 30, 2016, filed with
the SEC on August 8, 2016. All future written and oral forward-looking
statements attributable to us or persons acting on our behalf are
expressly qualified in their entirety by the previous statements. The
forward-looking statements herein speak as of the date of this press
release. We undertake no obligation to update any information contained
herein or to publicly release the results of any revisions to any
forward-looking statements that may be made to reflect events or
circumstances that occur, or that we become aware of, after the date of
this press release.
View source version on businesswire.com: http://www.businesswire.com/news/home/20161101005716/en/
Copyright Business Wire 2016