Martin Midstream Partners to acquire Atlas Pipeline assets

Martin Midstream Partners L.P. (MMLP) has entered into definitive documentation with a subsidiary of Atlas Pipeline Partners, L.P. (APL) to acquire all of the outstanding membership interests in Atlas Pipeline NGL Holdings, LLC and Atlas Pipeline NGL Holdings II, LLC for US$ 135 million, subject to customary post-closing adjustments. Atlas Pipeline NGL Holdings, LLC and Atlas Pipeline NGL Holdings II, LLC own a 19.8% limited partnership interest and a 0.2% general partnership interest in West Texas LPG Pipeline L.P. (WTLPG). WTLPG is operated by Chevron Pipe Line Company, an affiliate of Chevron Corporation, which owns the remaining 80% interest.

WTLPG owns a common carrier natural gas liquids transportation pipeline system originating in the Permian Basin continuing across North Texas and through East Texas with delivery to Mont Belvieu, Texas, for fractionation. In addition, the WTLPG system offers shippers access to several other connections including the Cajun-Sibon interstate pipeline in Southeast Texas. The WTLPG system features numerous receipt points including natural gas processing plants, truck loading facilities and NGL pipelines across multiple production basins. WTLPG owns approximately 2300 miles of pipeline with long-haul capacity of approximately 240 000 bbls/d and volumes that have been at or near capacity since 2011. This transaction marks the first significant investment by MMLP tied to the growing Permian Basin.

Assuming no new growth capital investments, MMLP expects to realise distributable cash flow from the acquisition of approximately US$ 5 million for the remainder of 2014 and approximately US$ 9 million for the full year 2015. To provide near-term economic support for the transaction, the owners of MMLP 's general partner, Martin Resource Management Corporation (MRMC), and Alinda Capital Partners have agreed to relinquish the next US$ 3 million in incentive distribution rights that they otherwise would be entitled to receive. This general partner support makes the acquisition immediately accretive to distributable cash flow per limited partner unit.

Ruben Martin, President and Chief Executive Officer of Martin Midstream GP LLC, MMLP's general partner, said: "We're excited to make this significant investment and participate in the transportation of the growing NGL production of West Texas and other basins along the WTLPG pipeline route. We believe the continued development of the Permian Basin and East Texas makes WTLPG a strategic long-term provider of NGL delivery to the market and fractionation points along the Gulf Coast. The transaction positions MMLP for further potential investment and creates a strategic growth platform for development of NGL infrastructure by MMLP. The WTLPG business complements MMLP's existing East Texas NGL pipeline that delivers Y-grade NGLs from East Texas production areas into Beaumont, Texas on a smaller scale. We look forward to working with our partners in WTLPG to pursue additional opportunities for growth through the WTLPG system. I'm excited about this transaction and I'm pleased that the owners of the general partner have decided to show their support for this transaction by forgoing incentive distribution rights."

MMLP will fund the transaction using available capacity under its revolving credit facility and expects closing to occur in the second quarter of 2014, subject to customary closing conditions.

Adapted from press release by Rosalie Starling

Read the article online at: https://www.worldpipelines.com/business-news/06052014/martin_midstream_partners_to_acquire_atlas_pipeline_assets_291/