American Midstream Partners LP executed a purchase and sale agreement with a DCP Midstream LLC affiliate to acquire entities holding onshore natural gas processing and offshore natural gas gathering and transportation and oil gathering assets for about $115 million. The acquisition is expected to be funded through private placement of American Midstream common units, and to close in August subject to approval under the Hart-Scott-Rodino Antitrust Improvements Act and other customary closing conditions.

Assets included in the transaction are:

  • The Mobile Bay gas processing plant, a 300 million cubic feet per day (MMcf/d) cryogenic processing plant in Mobile County, Ala., which is currently operating at about 70% of available capacity;
  • The Dauphin Island gathering and transmission system, a 270-mile Federal Energy Regulatory Commission (FERC) and non-FERC regulated system that delivers gas to the Mobile Bay plant, has a design capacity of about 1 billion cubic feet per day, and is exp3ected to add about 70 MMcf/d in processed volumes at Mobile Bay by the end of 2015 on an exit-rate basis; and
  • The Main Pass Oil Gathering System, an oil gathering system with a 160,000 barrels per day design capacity which American Midstream acquired a 67% interest in and which is operated by the minority interest owner Panther Midstream.

Total consideration for the acquired assets equates to an adjusted EBITDA multiple of about 8.5x for the next twelve months, which is expected to improve to an adjusted EBITDA of about 6.5x for all of 2015 due to throughput volume increases and cost savings.

As a result of the acquisition, American Midstream updated its forecast for 2014 adjusted EBITDA to a range of $44 million to $47 million, distributable cash flow to a range of $24 million to $27 million and capital growth expenditures, excluding capital for maintenance, to a range of $65 million to $70 million.