Crestwood Midstream Partners LP, Houston, (NYSE: CMLP) plans to acquire Denton, Texas-based Tristate Sabine LLC from affiliates of Dallas-based private equity firm Energy Spectrum Capital, Austin, Texas-based Zwolle Pipeline LLC and the Tristate management for $73 million in cash.
Crestwood will pay $65 million at closing and make a deferred payment of approximately $8 million one year following the closing date.
The assets include entities that own and operate approximately 52 miles of high-pressure natural gas gathering pipelines in Sabine Parish, Louisiana. The Tristate system provides gathering and treating services for Haynesville and Bossier shale production from Toledo Bend South Field area for redelivery to Gulf South Pipeline and Tennessee Gas Pipeline. Contracts on the Tristate System dedicate approximately 20,000 acres under long-term, fixed-fee arrangements. System capacity is currently being expanded to 100 million cubic feet per day for gathering and 80 million cubic feet per day for treating. The majority of the system has been constructed since 2009.
Robert G. Phillips, president and chief executive of Crestwood's general partner, says, "The Tristate acquisition fits with our strategy of owning assets in core shale play acreage that are backed by long-term, fixed-fee contracts with experienced producers. This transaction comes at a compelling value and will be easily integrated into Crestwood."
Crestwood will fund the deal with borrowings from its existing revolving-credit facility.
The deal is expected to close on Nov. 1.
Evercore Partners is financial advisor to Crestwood.
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