Crestwood Finishes $750 Million Arrow Midstream Deal

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Close Date
Estimated Price
750MM
Description

Acquired the midstream company operating a gathering system in the Bakken.

Crestwood Midstream Partners LP (NYSE: CMLP) and the owner of its general partner, Crestwood Equity Partners LP (NYSE: CEQP), has completed the acquisition of Arrow Midstream Holdings LLC for $750 million.

Arrow, which operates a gathering system in the Bakken, owns and operates approximately 460 miles of gathering pipeline composed of 150 miles of crude oil gathering pipeline, 160 miles of natural gas gathering pipeline and 150 miles of water gathering lines.

'We are pleased to complete this strategic acquisition in the core of the Bakken Shale,' stated Robert G. Phillips, chairman, president and CEO of Crestwood's general partner. 'The Arrow transaction demonstrates the execution of our growth strategy in liquids-focused shale plays, where we can utilize existing assets to provide additional services to our customers and enhance returns for our investors. The larger scale of the combined Crestwood partnership also enabled us to efficiently finance the acquisition with an appropriate blend of long-term debt and equity financing sources."

Current volumes on the Arrow system are approximately 50,000 barrels per day of crude oil, 15 million cubic feet per day (MMcf/d) of rich natural gas and 8,500 barrels per day of produced water. The Arrow gathering systems are anchored by long-term, primarily fee-based gathering contracts and more than 150,000 net acres of dedication from area producers including WPX Energy, QEP Resources and Kodiak Oil & Gas Corp.

The Arrow systems are currently being expanded to increase gathering capacities to 125,000 barrels of of crude oil, 100 MMcf/d and 40,000 barrels per day of produced water. The expansions will cost $80 million over the next 18-24 months. Crestwood expects to complete in the fourth quarter 2013 an initial phase of this expansion designed to gather natural gas currently being flared.

The $750 million base purchase price consists of $550 million of cash consideration and $200 million of Crestwood common units issued directly to the seller. The cash consideration was partially funded through the issuance of 16.1 million common units issued in October and the issuance of $600 million aggregate principal amount of 6.125% Senior Notes due 2022, with the remaining proceeds in excess of the cash purchase price used to reduce outstanding balances under Crestwood's revolving credit facility.