Marlin Midstream Partners LP announced that Marlin, its sponsor NuDevco Midstream Development LLC and Azure Midstream Energy LLC entered into definitive agreements that will result in Azure owning 100% of Marlin’s general partner. Azure will own 90% of the total outstanding incentive distribution rights in Marlin. Azure’s Legacy gathering system will also be contributed to Marlin for $162.5 million. NuDevco will retain all of its 10.7 million LP units, or 59.2% ownership stake, in Marlin, subject to an option granted to Azure to acquire 20% of such units from NuDevco to align interests and incentivize unit holder value creation.
The Legacy system includes about 658 miles of high- and low-pressure gathering lines that serve about 100,000 dedicated acres, mostly in the Cotton Valley formation in east Texas and northern Louisiana. The gathering lines are primarily under fixed-fee contracts, and have access to seven major downstream markets. Acquisition of the system is expected to be immediately accretive to Marlin’s distributable cash flow and the cash portion of consideration is expected to be fully funded under Marlin’s $225 million amended credit facility. The proposed transactions will result in a partnership with a total enterprise value of more than $500 million.
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