Crestwood Midstream Partners LP (NYSE: CMLP) and Crestwood Holdings Partners LLC announced their joint venture, Crestwood Marcellus Midstream LLC, has completed the previously announced acquisition of Antero Resources Appalachian Corp's Marcellus shale gathering system assets. The effective date of the acquisition is Jan. 1, 2012. Cash paid at closing totaled $376.8 million, which included preliminary closing adjustments of $1.8 million, related to first quarter 2012 operations and capital spending.

The acquired assets include 34 miles of low pressure gathering pipelines located in Harrison and Doddridge Counties, W. V., which are currently gathering approximately 230 million cubic feet per day from 63 existing horizontal Marcellus Shale wells, nine of which have been connected in 2012. Based on current estimates, an additional 51 wells are expected to be drilled and connected during the remainder of 2012.

The gathering pipelines deliver Antero's Marcellus Shale production to various regional pipeline systems including Columbia, Dominion and Equitrans and later this year will begin deliveries to intermediate systems that will connect to MarkWest Energy Partners' Sherwood Gas Processing Plant, expected to be placed in service in the third quarter of 2012.

As part of the acquisition, Crestwood Marcellus Midstream and Antero have entered into a 20-year gas gathering and compression agreement, which will provide for an Area of Dedication of approximately 127,000 gross acres, or 104,000 net acres. In addition, Antero has provided for annual minimum volume commitments and a right of first offer on future development on acreage adjacent to the Area of Dedication in Doddridge County.

"On behalf of both Crestwood Holdings and CMLP, we are very excited to complete this acquisition, expanding the Crestwood footprint into the Marcellus Shale," stated Robert G. Phillips, president and chief executive of CMLP's general partner. "The acquisition is an excellent fit with our strategy of building our portfolio on a solid foundation of long-term fixed-fee revenue streams. We are equally pleased to be working with Antero, an experienced producer who has established an excellent track record and reputation successfully developing unconventional shale plays. Antero's wells have been among the most prolific producing wells completed in the Marcellus Shale play to date. The Area of Dedication is largely located in the rich gas window of the southwestern core of the Marcellus Shale play, which provides CMLP with additional exposure in areas where producers' economics are enhanced with the higher content of natural gas liquids contained in the gas stream."

The Crestwood Marcellus Midstream LLC joint venture was primarily funded by a $131 million equity contribution from CMLP, representing a 35% ownership interest, and a $244 million equity contribution from Crestwood Holdings, representing a 65% ownership interest. Crestwood Marcellus Midstream LLC has entered into a $200 million revolving credit facility to finance future capital requirements and working capital needs of the joint venture.

CMLP funded its equity contribution from borrowings under its $500 million revolving credit facility. Crestwood Holdings funded its contribution from a combination of additional equity contributions from its sponsor, First Reserve Corp., and a new $400 million term-loan credit facility that was also used to refinance existing indebtedness at Crestwood Holdings. The Crestwood Marcellus Midstream LLC facility and the Crestwood Holdings facility were arranged and syndicated by a group of banks including BofA Merrill Lynch, BNP Paribas, Citigroup, RBC Capital Markets, The Royal Bank of Scotland PLC and UBS Securities.

"The structure of the joint venture between CMLP and Crestwood Holdings demonstrates the commitment and value that First Reserve provides to CMLP," added Phillips. "The equity contribution into Crestwood Holdings by First Reserve and Crestwood Holdings' access to the term loan market enabled the acquisition to be completed within one month of signing the definitive agreement. In addition, CMLP has maintained sufficient liquidity to fund its 2012 planned capital expenditure program without the need to access additional equity capital. Most importantly, the joint venture provides CMLP with visible organic growth and potential drop-down acquisition opportunities over the next several years," Phillips added.