HOUSTON, Oct. 10, 2013 /PRNewswire/ -- Crestwood
Midstream Partners LP (NYSE: CMLP) ("Crestwood" or the
"Partnership") today announced that its wholly-owned subsidiary,
Crestwood Arrow Acquisition LLC ("Crestwood Arrow"), has entered
into an agreement to acquire Arrow Midstream Holdings, LLC
("Arrow"), a privately-held midstream company, for approximately
$750 million, subject to customary
purchase price adjustments. The acquisition marks a
continuation of Crestwood's liquids-focused strategy by
significantly expanding Crestwood's operational footprint in the
Bakken Shale and highlights the immediate benefits of the merger of
Crestwood and Inergy Midstream, which was completed on Monday, October 7, 2013. The transaction is
expected to be immediately accretive to Crestwood's estimated
distributable cash flow per limited partner unit in 2014, with
growing accretion thereafter based upon projected production
increases from the Arrow assets. The transaction is expected to
close in the fourth quarter of 2013.
Arrow, through its wholly-owned subsidiaries, owns and operates
substantial crude oil, natural gas and water gathering systems
located on the Fort Berthold Indian Reservation in the core of the
Bakken Shale in McKenzie and
Dunn Counties, North Dakota. The system today consists of
over 460 miles of gathering pipeline including 150 miles of crude
oil gathering pipeline, 160 miles of natural gas gathering
pipeline, and 150 miles of water gathering lines. Current volumes
on the system are approximately 50,000 barrels per day ("Bbls/d")
of crude oil, 15 million cubic feet per day ("MMcf/d") of rich
natural gas and 8,500 Bbls/d of water. Additionally, the acquired
assets include salt water disposal wells and a 23-acre central
delivery point ("CDP") with multiple pipeline take-away outlets and
a fully-automated truck loading facility.
The Arrow gathering systems are anchored by long-term, primarily
fee-based, gathering contracts with blue chip producers who have
dedicated over 150,000 acres to Arrow including more than 1,000
potential drilling locations on the acreage. The producer customers
are all world-class shale developers who have substantial
development programs on the dedicated acreage and have identified
the Bakken Shale as a significant driver of their future production
growth. The contracts provide for fixed-fee gathering services with
annual escalators for crude, natural gas and water gathering
services. There are currently eight drilling rigs running in the
area of dedication with additional rig activity in areas
immediately adjacent to the system.
The Arrow systems are located approximately 60 miles southeast
of Crestwood's COLT Hub ("COLT") crude rail and pipeline terminal,
located in Williams County, North
Dakota, and have direct connectivity with COLT through the
Hiland and Tesoro crude oil pipeline systems. The COLT Hub is one
of the Bakken Shale's leading rail transportation avenues for East
Coast and West Coast markets with current COLT Hub rail loading
capacity being expanded to 160,000 Bbls/d. Many of Crestwood's
largest customers at COLT are also major purchasers of crude oil at
the Arrow CDP, and the direct connectivity between Arrow and COLT
provides significant opportunity for synergies and expanded
customer services. By utilizing its existing Bakken infrastructure,
market knowledge and midstream expertise across the value chain,
Crestwood is well-positioned to link growing crude supply from the
Arrow system to market demand at COLT, resulting in improved sales
optionality and optimal pricing for Arrow producers while
increasing supply sourcing options as well as overall demand and
utilization for market customers at COLT.
"We are very excited about the addition of the Arrow assets to
Crestwood's rapidly expanding crude services business and our
Bakken Shale footprint," stated Robert G.
Phillips, Chairman, President and Chief Executive Officer of
Crestwood's general partner. "We believe this transaction is a
strong first step in executing Crestwood's growth strategy
following our recently closed merger with Inergy. The Bakken Shale
is a core area for our future growth, and by extending our platform
upstream of COLT, Crestwood will be expanding and optimizing the
full suite of liquids value chain services we can provide for both
our producer and demand-side customers. We are keenly focused on
growing our crude oil and NGL businesses. After the close of
this transaction, we will be one of the largest Bakken midstream
service providers servicing approximately 18% of current total
Bakken crude oil production. Nationwide, we will be handling over
470,000 Bbls/d of crude oil and NGLs in addition to over 2 billion
cubic feet per day of natural gas through our gathering systems and
transportation assets."
Mr. Phillips added, "Because of the early integration efforts of
Crestwood and Inergy's commercial, operations and back-office teams
in advance of the merger, the addition of the Arrow assets and
operations will effectively be like a bolt-on acquisition.
Additionally, our current operations at the nearby COLT Hub provide
a base of operations to quickly integrate Arrow into the Crestwood
operating model. We are very impressed with the operating platform
the Arrow team has established in the area and are excited to
transition the organization into the Crestwood family. Like
Crestwood, the Arrow operational and commercial staff is committed
to safe and reliable operations, first-class customer service, and
active involvement and support for the communities and environments
in which we operate. Importantly, Arrow has established a great
local operating relationship with the Mandan, Hidatsa & Arikara Nation ("MHA")
and Crestwood is committed to maintaining and nurturing the MHA
relationship as we jointly work to expand the systems, benefitting
both producers and royalty owners in the area. The opportunity
around our Bakken Shale position is significant, and we are very
excited to shift our focus from the merger and the Arrow
acquisition to the execution of our growth strategy across the
midstream value chain."
The Arrow system is currently undergoing an extensive expansion
of its gas gathering capacity to capture current flared natural gas
volumes. These enhancement projects, including line looping and
system compression, are expected to be substantially complete in
the fourth quarter of 2013. Thereafter, the systems will be
primarily built-out with modest organic capital requirements of
approximately $80 million over the
next 18 to 24 months to reach targeted operational throughput
capacities of 125,000 Bbls/d of crude oil, 100 MMcf/d of natural
gas, and 40,000 Bbls/d of water.
Citi acted as exclusive financial advisor to Crestwood. In
connection with the transaction, Crestwood has secured
fully-committed debt financing from Citi Global Markets Inc. and
fully-committed equity financing in the form of equity
consideration paid directly to the seller as well as additional
equity financing from undisclosed accredited
investors. There are no financing contingencies to
close the transaction.
Conference Call
Crestwood's management team will hold a conference call with an
accompanying slide presentation to review this transaction on
Thursday, October 10 at 11:00 a.m. Eastern Time (10:00 a.m. Central Time). To participate in
the call, dial 888-549-7880 and ask for the Crestwood Midstream
Partners conference call. The slide presentation can be
viewed and downloaded by going to the Investor Relations section of
the Company's website at http://www.crestwoodlp.com. The call
will also be webcast live over the Internet and can be accessed
from Crestwood's website, and an archive will be available shortly
after the call. A telephone replay will be accessible through
October 17, 2013, by dialing
800-406-7325 and entering the passcode 4645313.
About Crestwood Midstream Partners LP
Houston, Texas, based Crestwood
Midstream (NYSE: CMLP) is a master limited partnership that owns
and operates midstream businesses in multiple unconventional shale
resource plays across the United States. Crestwood Midstream
is engaged in the gathering, processing, treating and compression
of natural gas; transportation and storage of natural gas;
transportation, fractionation, storage, and terminalling of NGLs;
and storage and terminalling of crude oil. Prior to the merger of
Crestwood Midstream Partners LP into Inergy Midstream, L.P., which
was completed on October 7, 2013, the
partnership was named Inergy Midstream, L.P. and was traded on the
New York Stock Exchange under the ticker symbol "NRGM." For more
information about Crestwood, visit www.crestwoodlp.com.
About Crestwood Equity Partners LP
Houston, Texas, based Crestwood
Equity (NYSE: CEQP) is a master limited partnership that owns the
general partner interest (including the incentive distribution
rights) and an approximate 4% limited partner interest of Crestwood
Midstream. In addition, Crestwood Equity's operations include
a natural gas storage business in Texas and an NGL and crude oil supply and
logistics business that serves customers in the United States and Canada. Prior to the merger of Crestwood
Midstream Partners LP into Inergy Midstream, L.P., which was
completed on October 7, 2013,
Crestwood Equity Partners LP was named Inergy, L.P. and was traded
on the New York Stock Exchange under the ticker symbol "NRGY."
Forward Looking Statements
The statements in this communication regarding future events,
occurrences, circumstances, activities, performance, outcomes and
results are forward-looking statements. Although these statements
reflect the current views, assumptions and expectations of
Crestwood Midstream and Crestwood Equity management, the matters
addressed herein are subject to numerous risks and uncertainties
which could cause actual activities, performance, outcomes and
results to differ materially from those indicated. Such
forward-looking statements include, but are not limited to,
statements about the future financial and operating results,
objectives, expectations and intentions and other statements that
are not historical facts. Factors that could result in such
differences or otherwise materially affect Crestwood Midstream's or
Crestwood Equity's financial condition, results of operations and
cash flows include, without limitation, the risks that the
Crestwood Midstream and Crestwood Equity businesses will not be
integrated successfully or may take longer than anticipated; the
possibility that expected synergies will not be realized, or will
not be realized within the expected timeframe; fluctuations in oil,
natural gas and NGL prices; the extent and success of drilling
efforts, as well as the extent and quality of natural gas volumes
produced within proximity of Crestwood Midstream or Crestwood
Equity assets; failure or delays by customers in achieving expected
production in their natural gas projects; competitive conditions in
the industry and their impact on the ability of Crestwood Midstream
or Crestwood Equity to connect natural gas supplies to Crestwood
Midstream or Crestwood Equity gathering and processing assets or
systems; actions or inactions taken or non-performance by third
parties, including suppliers, contractors, operators, processors,
transporters and customers; the ability of Crestwood Midstream or
Crestwood Equity to consummate acquisitions, successfully integrate
the acquired businesses, realize any cost savings and other
synergies from any acquisition; changes in the availability and
cost of capital; operating hazards, natural disasters,
weather-related delays, casualty losses and other matters beyond
Crestwood Midstream or Crestwood Equity's control; timely receipt
of necessary government approvals and permits, the ability of
Crestwood Midstream or Crestwood Equity to control the costs of
construction, including costs of materials, labor and right-of-way
and other factors that may impact either company's ability to
complete projects within budget and on schedule; the effects of
existing and future laws and governmental regulations, including
environmental and climate change requirements; the effects of
existing and future litigation; and risks related to the
substantial indebtedness of either company, as well as other
factors disclosed in Crestwood Midstream and Crestwood Equity's
filings with the U.S. Securities and Exchange Commission. You
should read filings made by Crestwood Midstream and Crestwood
Equity with the U.S. Securities and Exchange Commission, including
Annual Reports on Form 10-K for the year ended December 31, 2012 and September 30, 2012, respectively, and the most
recent Quarterly Reports and Current Reports, for a more extensive
list of factors that could affect results. Crestwood Midstream and
Crestwood Equity do not assume any obligation to update these
forward-looking statements.
CONTACTS
Crestwood
Mark
Stockard
832-519-2207
mstockard@crestwoodlp.com
SOURCE Crestwood Midstream Partners LP; Crestwood Equity
Partners LP