THE WOODLANDS, Texas,
March 4, 2016 /PRNewswire/
-- Summit Midstream Partners, LP (NYSE: SMLP) announced today
that on March 3, 2016 (the "Initial
Close"), it closed the previously announced drop down acquisition
of substantially all of (i) the issued and outstanding membership
interests of Summit Utica, Meadowlark Midstream and Tioga Midstream
(collectively, the "Contributed Entities"), each limited liability
companies and indirect wholly owned subsidiaries of Summit
Midstream Partners Holdings, LLC ("SMP Holdings") and (ii) SMP
Holdings' 40% joint venture interest in each of Ohio Gathering and
Ohio Condensate (collectively with the Contributed Entities, the
"2016 Drop Down Assets") (the "2016 Drop Down").
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In conjunction with Initial Close, SMLP made a $360.0 million cash payment to SMP Holdings,
subject to customary working capital and capital expenditure
adjustments (the "Initial Payment"). The Initial Payment was funded
with proceeds from SMLP's upsized revolving credit facility, which,
by an amendment executed in February
2016, has an increased borrowing capacity of $1.25 billion effected by the closing of the 2016
Drop Down. A final payment will made to SMP Holdings in 2020
(the "Deferred Payment"). The Deferred Payment will be equal to:
(a) six-and-one-half (6.5) multiplied by the average adjusted
EBITDA of the Drop Down Assets for 2018 and 2019; less (b) the
Initial Payment; less (c) all capital expenditures incurred for the
Drop Down Assets between the Initial Close and December 31, 2019;
plus (d) all adjusted EBITDA from the Drop Down Assets between the
Initial Close and December 31, 2019.
The terms of the 2016 Drop Down were approved by the board of
directors of SMLP's general partner and by the board of director's
conflicts committee, which consists entirely of independent
directors. The conflicts committee engaged Evercore Partners to act
as its independent financial advisor and to render a fairness
opinion, and Akin Gump Strauss Hauer & Feld, LLP to act as its
legal advisor.
Overview of 2016 Drop Down Assets
Summit Midstream Utica, LLC ("Summit Utica") is a natural gas
gathering system located in the Appalachian Basin in southeastern
Ohio serving producers targeting
the Utica and Point Pleasant shale formations. The
system is currently in service and under development with fourth
quarter of 2015 volume throughput of 75 million cubic feet per day
("MMcf/d"). Upon full development, Summit Utica will be
composed of 60 miles of low-pressure and high-pressure gathering
pipelines and three compressor and dehydration stations with total
throughput capacity of 450 MMcf/d. The Summit Utica system
gathers and delivers natural gas, primarily under long-term,
fee-based contracts which include acreage dedications. XTO
Energy Inc. serves as the anchor customer on the system. The
system interconnects with Energy Transfer Partners, L.P.'s Utica
Ohio River Pipeline.
Ohio Gathering Company, L.L.C. ("Ohio Gathering") is a natural
gas gathering system located in the core of the Utica Shale in
southeastern Ohio which is
currently in service and under development. The gathering
system, which is currently in service and under development, spans
the condensate, rich-gas, and dry-gas windows of the Utica Shale
for multiple producers that are targeting natural gas, condensate
and NGL production from the Utica
and Point Pleasant formations
across Harrison, Guernsey, Belmont, Noble, and Monroe counties in Ohio. Currently, the
system is composed of more than 250 miles of low-pressure and
high-pressure gathering pipeline and offers throughput capacity in
excess of 1.9 Bcf/d. Condensate and rich gas production is
gathered, compressed, dehydrated and delivered to the Cadiz and Seneca processing complexes, which are owned
by a joint venture owned between MPLX LP ("MPLX") and The Energy
and Minerals Group ("EMG"). Dry gas production is gathered,
compressed, dehydrated and delivered to a downstream interconnect
with TETCO and another third party pipeline. All gathering
services on the Ohio Gathering system are provided pursuant to
long-term, fee-based gathering agreements. Gulfport Energy
Corporation ("Gulfport") serves as the anchor customer for Ohio
Gathering. In the fourth quarter of 2015, Ohio Gathering
gathered an average of 813 MMcf/d of natural gas. SMLP is
acquiring a 40% equity interest in Ohio Gathering; MPLX and EMG own
the remaining 60%.
Ohio Condensate Company, L.L.C. ("Ohio Condensate") is a 23
thousand barrel per day ("Mbbl/d") condensate stabilization
facility located in the core of the Utica Shale in southeastern
Ohio. The facility commenced operations in February 2015 and is underpinned by a long-term,
fee-based agreement with Gulfport. Condensate stabilization
allows for producers to capture the NGLs that would otherwise flash
from condensate in atmospheric conditions. Ohio Condensate is
the largest stabilization facility in the Utica Shale and will
ultimately serve as the origination point for MPLX's Cornerstone
Pipeline which will deliver condensate to Marathon Petroleum's
refinery in Canton, Ohio. In
the fourth quarter of 2015, Ohio Condensate handled an average of
18 Mbbl/d of condensate. SMLP is acquiring a 40% equity
interest in Ohio Condensate; MPLX owns the remaining 60%.
Tioga Midstream, LLC ("Tioga Midstream") is a crude oil,
produced water and associated natural gas gathering system which is
currently in service with 73 miles of crude oil gathering pipeline,
83 miles of produced water gathering pipeline and 79 miles of
associated natural gas gathering pipeline. The Tioga
Midstream system is located in Williams
County, North Dakota and has 20 Mbbl/d of crude oil
gathering capacity, 25 Mbbl/d of produced water gathering capacity
and 14 MMcf/d of natural gas gathering capacity. All
gathering services on the Tioga Midstream system are provided
pursuant to long-term, fee-based gathering agreements with Hess
Corp. ("Hess"), which is primarily targeting crude oil production
from the Bakken and Three Forks shale formations. All crude
oil, produced water and natural gas gathered on the Tioga Midstream
system is delivered to downstream pipelines and disposal wells (for
produced water) that are owned and operated by Hess. In the
fourth quarter of 2015, Tioga Midstream gathered an average of 5
Mbbl/d of crude oil, 5 Mbbl/d of produced water, and 7 MMcf/d of
natural gas.
Meadowlark Midstream Company, LLC ("Meadowlark Midstream") is
currently composed of two separate gathering systems, including (i)
an associated natural gas gathering and processing system located
in the DJ Basin serving producers primarily targeting crude oil
production from the Niobrara and
Codell shale formations in northern Colorado and southern Wyoming ("Niobrara G&P") and (ii) a crude
oil and produced water gathering system located in the Williston Basin serving an independent
producer targeting the Bakken and Three Forks shale formations in
northwestern North Dakota
("Blacktail").
- The Niobrara G&P system is currently in service with 91
miles of low-pressure and high-pressure gathering pipeline and a
cryogenic natural gas processing plant with processing capacity of
15 MMcf/d; processing capacity is currently being expanded to 20
MMcf/d. Volume throughput on the Niobrara G&P system averaged 7
MMcf/d in the fourth quarter of 2015.
- The Blacktail gathering system is currently in service with 53
miles of crude oil gathering pipeline and 96 miles of produced
water gathering pipeline. The Blacktail system is located in
Williams County, North Dakota and
has 40 Mbbl/d of crude oil throughput capacity and 30 Mbbl/d of
produced water throughput capacity. All gathering services on the
Blacktail system are provided pursuant to a long-term, fee-based
gathering agreement with an independent producer that is primarily
targeting crude oil production from the Bakken and Three Forks
shale formations. Crude oil on the Blacktail system is currently
delivered to the COLT rail terminal in Epping, North Dakota and produced water is
delivered to third-party disposal wells located throughout
Williams County, North Dakota. In
the fourth quarter of 2015, Blacktail gathered an average of 4
Mbbl/d of crude oil and 7 Mbbl/d of produced water.
About Summit Midstream Partners, LP
SMLP is a growth-oriented limited partnership focused on
developing, owning and operating midstream energy infrastructure
assets that are strategically located in the core producing areas
of unconventional resource basins, primarily shale formations, in
the continental United States.
SMLP currently provides natural gas, crude oil and produced water
gathering services pursuant to primarily long-term and fee-based
gathering and processing agreements with customers and
counterparties in five unconventional resource basins: (i) the
Appalachian Basin, which includes the Marcellus and Utica shale formations in West Virginia and Ohio; (ii) the Williston Basin, which includes the Bakken and
Three Forks shale formations in North
Dakota; (iii) the Fort
Worth Basin, which includes the Barnett Shale formation in
Texas; (iv) the Piceance Basin,
which includes the Mesaverde formation as well as the Mancos and Niobrara shale formations in Colorado and Utah; and (v) the Denver-Julesburg Basin,
which includes the Niobrara and
Codell shale formations in Colorado. SMLP also owns a 40% interest
in a joint venture that is developing natural gas gathering and
condensate stabilization infrastructure in the Utica Shale in
Ohio. SMLP is headquartered
in The Woodlands, Texas with
regional corporate offices in Denver,
Colorado and Atlanta,
Georgia.
About Summit Midstream Partners, LLC
As of March 2, 2016, Summit Midstream
Partners, LLC ("Summit Investments") beneficially owned a 44.9%
limited partner interest in SMLP and indirectly owns and controls
the general partner of SMLP, Summit Midstream GP, LLC, which has
sole responsibility for conducting the business and managing the
operations of SMLP. Summit Investments is a privately held company
controlled by Energy Capital Partners II, LLC, and certain of its
affiliates. As of March 2,
2016, an affiliate of Energy Capital Partners II, LLC
directly owned a 4.9% limited partner interest in SMLP.
Forward-Looking Statements
This press release includes certain statements concerning
expectations for the future that are forward-looking within the
meaning of the federal securities laws. Forward-looking statements
contain known and unknown risks and uncertainties (many of which
are difficult to predict and beyond management's control) that may
cause SMLP's actual results in future periods to differ materially
from anticipated or projected results. An extensive list of
specific material risks and uncertainties affecting SMLP is
contained in its 2015 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on February 29, 2016, as amended and updated from
time to time. Any forward-looking statements in this press release
are made as of the date of this press release and SMLP undertakes
no obligation to update or revise any forward-looking statements to
reflect new information or events.
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