Crestwood Midstream Partners LP (NYSE: CMLP) has completed the previously announced acquisition of midstream assets in the Fayetteville Shale and the Granite Wash plays from Tulsa, Oklahoma-based Frontier Gas Services LLC for approximately $338 million cash paid at closing.
The acquired assets in the Fayetteville Shale, located in Northwest Arkansas, consist of approximately 127 miles of gathering pipelines with a capacity of approximately 510 million cubic feet per day (MMcf/d), treating capacity of approximately 165 MMcf/d and approximately 35,000 hp of compression serving dedicated acreage and natural gas production currently under contracts with BHP Billiton Petroleum, BP America and ExxonMobil’s XTO subsidiary.
The Granite Wash assets, located in the Texas Panhandle, include a 28 mile natural gas and natural gas liquids pipeline system and a 36 MMcf/d cryogenic processing plant serving dedicated acreage and natural gas production currently under contracts with Chesapeake Energy and Linn Energy. Crestwood LP plans to install a second processing plant with approximately 60 MMcf/d of additional capacity with plans to be in service by the end of 2011 to support expected growth in volumes from the emerging Granite Wash play.
“This deal, coming on the heels of our October 2010 acquisition of Barnett Shale midstream assets in North Texas, is evidence of our long term strategy to expand Crestwood LP’s geographic and operating footprint and diversify the Partnership’s customer portfolio to include some of the leading producers in the shale or unconventional resource development business,” said Robert G. Phillips, President and chief executive officer (CEO) of Crestwood LP’s general partner.
The acquisition was financed in part with $153 million in net proceeds received from the Partnership’s previously announced private placement of approximately 6.2 million units of new Class C limited partner interests, at a per unit price of $24.50. In addition, Crestwood LP closed its previously announced private placement of $200 million aggregate principal amount of 7.75% senior notes due 2019. Crestwood LP received aggregate net proceeds from the sale of the senior notes of approximately $193 million, after deducting the initial purchaser’s commissions and estimated expenses.
“In contemplation of increased capital project opportunities in 2011-12, due largely to the Frontier acquisition, we have received commitments from lenders in Crestwood LP’s existing revolving credit facility to increase the maximum borrowing capacity to $500 million from the current $400 million," Phillips stated.
Source: Crestwood Midstream Partners LP
