American Midstream Closes Acquisition of Offshore Oil Gathering Assets from DCP Midstream
Partnership Provides Updated 2014 Guidance
DENVER, August 11, 2014-- American Midstream Partners, LP (AMID) (“Partnership”) announced today that it completed the acquisition of entities holding offshore oil gathering assets from an affiliate of DCP Midstream, LLC (“DCP”).
On July 14, 2014, the Partnership announced the execution of a Purchase and Sale Agreement (“PSA”) for the acquisition from DCP of entities holding onshore natural gas processing and offshore natural gas gathering and transportation and oil gathering assets for consideration of approximately $115 million. The assets to be acquired included the Mobile Bay gas processing plant (“Mobile Bay”), Dauphin Island gathering and transmission system (“DIGP”), and DCP’s interest in the Main Pass Oil Gathering System (“MPOG”).
Subsequent to execution of the PSA, DCP notified the Partnership that a material customer would be moving its production from DIGP and Mobile Bay. The loss of such customer’s production constituted a Material Adverse Effect (as defined in the PSA) with respect to such entities. As a result, on August 11, 2014, the PSA was amended to exclude the Mobile Bay and DIGP assets and to include only the acquisition of DCP’s interest in MPOG. In addition, the purchase price was amended to $13.5 million. The acquisition closed on August 11, 2014 and was funded through borrowings on the Partnership’s revolving credit facility.
Total consideration for the MPOG assets equates to an Adjusted EBITDA multiple of approximately 5.0x to 6.0x for the next twelve months and full-year 2015.
“We are excited to acquire a majority interest in MPOG to complement our existing offshore gas gathering and transmission business in the eastern Gulf of Mexico,” said Steve Bergstrom, Executive Chairman, President and Chief Executive Officer. “While smaller than originally anticipated, the acquisition is consistent with our growth strategy to pursue third-party and bolt-on opportunities and we now have the ability to offer oil gathering services to offshore producers, which will allow us to more effectively compete for deep-water Gulf of Mexico production. As a result of the acquisition and additional growth in the Partnership we anticipate in 2015, we intend to recommend to the Board of Directors an increase to the quarterly distribution of approximately three percent for the fourth quarter 2014 distribution.”
2014 Forecast Update
On July 14, 2014, and in conjunction with the announced acquisition of assets from DCP, American Midstream updated its forecast for 2014 Adjusted EBITDA to a range of $44 million to $47 million and Distributable Cash Flow to a range of $24 million to $27 million.
As a result of the change to the asset acquisition from DCP, and the recently executed amendment to the Partnership agreement in relation to the outstanding Series A Units, the Partnership updated its forecast for 2014 Adjusted EBITDA and Distributable Cash Flow. The updated 2014 forecast also includes assumptions for costs associated with the DCP acquisition integration and near-term company growth, and does not include other acquisitions, drop downs, or asset development projects the Partnership is pursuing.
2014 Adjusted EBITDA is forecasted to be in a range of $42 million to $45 million and Distributable Cash Flow is forecasted in a range of $27 million to $30 million.
About American Midstream Partners, LP
Denver-based American Midstream Partners is a growth-oriented limited partnership formed to own, operate, develop and acquire a diversified portfolio of midstream energy assets. The Partnership provides midstream services in the Texas, Gulf Coast and Southeast regions of the United States. For more information about American Midstream Partners, LP, visit www.AmericanMidstream.com.
This press release includes forward-looking statements. These statements relate to, among other things, projections of operational volumetrics and improvements, growth projects, cash flows and capital expenditures. We have used the words "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," "should," "will," "potential," and similar terms and phrases to identify forward-looking statements in this press release. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. Our operations and future growth involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, could materially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. Actual results and trends in the future may differ materially from those suggested or implied by the forward-looking statements depending on a variety of factors which are described in greater detail in our filings with the SEC. In conjunction with the closing of the acquisition described in this press release, we face risks associated with the integration of the business, decreased liquidity, increased interest and other expenses, assumption of potential liabilities, diversion of management’s attention, and other risks associated with acquisitions and growth. Please see our Risk Factor disclosures included in our Annual Report on Form 10-K for the year ended December 31, 2013 filed on March 11, 2014, and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 filed on August 11, 2014. All future written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the previous statements. The forward-looking statements herein speak as of the date of this press release. We undertake no obligation to update any information contained herein or to publicly release the results of any revisions to any forward-looking statements that may be made to reflect events or circumstances that occur, or that we become aware of, after the date of this press release.
Non-GAAP Financial Measures
This press release includes forecasted non-GAAP financial measures for American Midstream , including “Adjusted EBITDA” and “Distributable Cash Flow.” The GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is net income (loss). Net income attributable to the Partnership is forecasted to be approximately $7.0 million in 2014.
This press release also includes forecasted non-GAAP financial measures for the acquired assets, including “Adjusted EBITDA.” The GAAP measure most directly comparable to Adjusted EBITDA is net income (loss). Net income attributable to the acquired assets is forecasted to be approximately $1.7 million for the next 12 months and approximately $1.9 million for 2015.
Adjusted EBITDA is calculated as net income, plus interest expense, income tax expense, depreciation expense, certain non-cash charges such as non-cash equity compensation, unrealized losses on commodity derivative contracts and selected charges that are unusual or nonrecurring, less interest income, income tax benefit, unrealized gains on commodity derivative contracts, amortization of commodity put purchase costs, and selected gains that are unusual or nonrecurring.
Distributable cash flow is calculated as Adjusted EBITDA plus interest income, less cash paid for interest expense, normalized maintenance capital expenditures, and dividends related to the Series A convertible preferred units.
American Midstream Partners, LP
Allysa Howell, 303-942-2359
Investor Relations Manager
Venture Capital Database