• / Free eNewsletters & Magazine
  • / My Account
Home>American Midstream Announces Drop-Down of Delta House Interests; Further Enhancing Deepwater Gulf of Mexico Position

American Midstream Announces Drop-Down of Delta House Interests; Further Enhancing Deepwater Gulf of Mexico Position

American Midstream Announces Drop-Down of Delta House Interests; Further Enhancing Deepwater Gulf of Mexico Position

10/02/2017

American Midstream Announces Drop-Down of Delta House Interests; Further Enhancing Deepwater Gulf of Mexico Position

  • Acquires additional 15.5% interest in Delta House floating production and processing system
  • Delta House expected to operate near peak capacity for several years
  • Partnership successfully redeploys capital from sale of Propane business
  • Expects to acquire additional drop-down interests in Delta House and other assets from ArcLight

American Midstream Partners, LP (NYSE:AMID) (“Partnership” or “AMID”) announced today the acquisition and closing of an additional 15.5% equity interest in Delta House, a fee-based, semi-submersible floating production and processing system (collectively, “Delta House”), from affiliates of ArcLight Capital Partners, LLC (“ArcLight”), which controls the general partner of the Partnership, for total consideration of approximately $125.4 million. Post-closing, the Partnership and ArcLight will directly and indirectly own a 35.7% and 23.3% interest in Delta House, respectively.

The purchase of additional Delta House interests is immediately accretive to Adjusted EBITDA and distributable cash flow and solidifies the Partnership’s strategy of building a deep-water super-system in the Mississippi Canyon region in the Gulf of Mexico through a portfolio of interconnected, complementary assets with predictable cash flow. Tie-back inventory into Delta House, including individual wells and prospects remains strong as anchor producers announced several developments available for tie-in through 2018 and 2019. The Partnership expects Delta House to operate near peak capacity for the next several years.

As part of AMID’s growth strategy, the Partnership anticipates ArcLight’s remaining 23.3% interest in Delta House, and other assets, to be offered to the Partnership for future drop-downs over the coming quarters, depending on market conditions and other factors.

A conflicts committee of the board of directors of the general partner of the Partnership composed of independent directors, as well as the full board of directors of the general partner, unanimously approved the transaction. This committee was advised by Robert W. Baird & Co. as to financial matters and Thompson & Knight LLP as to legal matters.

“We are pleased with the ongoing performance of Delta House and the associated strong returns from this world class asset anchored by a backlog of well tie-backs. We are committed to making investments that create long-term value as we position AMID for sustainable growth with the substantial support of our sponsor,” stated Lynn Bourdon, Chairman, President and Chief Executive Officer.

Capital Optimization

The purchase of the additional Delta House interests was partially funded with proceeds from the September 1, 2017 sale of the Partnership’s propane marketing services business (“Propane”) and borrowings under its senior secured revolving credit facility. The acquisition of the Delta House interests, in addition to the Partnership’s recent acquisitions, completes the reallocation of $170 million in cash proceeds from the sale of Propane. These steps are part of the Partnership’s strategy of creating long-term value for all unitholders.

©2017 Morningstar Advisor. All right reserved.