American Midstream to acquire Eagle Ford Shale system

American Midstream Partners, LP has announced the execution of an agreement to purchase an approximate 120 mile natural gas gathering and redelivery system located in the oil window of the Eagle Ford shale.

In December 2013, an affiliate of American Midstream's general partner entered into a purchase and sale agreement with a subsidiary of Penn Virginia Corporation to acquire the gathering and redelivery system.

American Midstream will effect the closing of the transaction by acquiring 100% of the equity of the affiliate of its general partner that previously enter into the purchase and sale agreement with Penn Virginia.

The system is located in Gonzales and Lavaca counties, Texas, in close proximity to the previously announced full-well-stream gathering system currently under development by an affiliate of American Midstream’s general partner.

American Midstream expects the acquired system to generate approximately US$ 8 million of EBITDA in 2014, and will be acquired for an aggregate purchase price of $100 million, subject to certain purchase price adjustments to account for capital expenditures incurred by Penn Virginia during the fourth quarter of 2013 and through the acquisition closing date

Construction and operation of the Penn Virginia system began in 2011 and the system currently has operating capacity of approximately 90 million m³/day. The system is currently flowing more than 40 million m³/day between sales volumes and gas lift, with a significant ramp in volumes expected throughout 2014 and thereafter.

Production gathered by the system is compressed and delivered to a third-party for processing or redelivered to Penn Virginia for gas lift. Penn Virginia is operating six to seven rigs on the system with nearly 900 remaining drilling locations in the acreage dedicated to American Midstream, and volumes are expected to triple from current operating levels by mid 2015.

“We are excited to be working with Penn Virginia in the prolific oily window of the Eagle Ford shale,” stated Steve Bergstrom, Executive Chairman, President and Chief Executive Officer. “The gathering system is located in an area of the Eagle Ford that is a primary investment focus for Penn Virginia."

Edited from press release by Hannah Priestley-Eaton

Read the article online at: https://www.worldpipelines.com/business-news/24012014/american_midstream_to_acquire_eagle_ford_shale_system/