Western Gas Partners to Acquire Anadarko Midstream Assets
To purchase 100% WI in Mountain Gas Resources LLC which owns Red Desert Complex, 22% interest in Rendezvous Gas Services LLC & related facilities, gaining total processing capacity of 173 MMcf/d, 1,295 miles of gathering lines including a 338-mile mainline gathering system serving the Jonah and Pinedale Anticline fields in SW WY.
Western Gas Partners LP, Houston, (NYSE: WES) on Dec. 16 announced that it has agreed to acquire the Red Desert Complex and related assets, primarily located in the greater Green River Basin of southwestern Wyoming, from Anadarko Petroleum Corp. (NYSE: APC) for total consideration of $483 million.
“We continue to execute our strategy of growing the WES portfolio in liquids-rich areas,” said Western Gas Partners’ president and CEO Officer Don Sinclair. “These assets are a great complement to our existing footprint in the greater Green River Basin, which continues to see solid resource development. As a result of our capital markets activity in 2011, we are able to consummate this material transaction while still maintaining conservative leverage ratios.”
Western Gas will purchase Anadarko’s 100-percent ownership interest in Mountain Gas Resources LLC (MGR), which owns the Red Desert Complex (Red Desert), a 22% interest in Rendezvous Gas Services, LLC. (Rendezvous), and related facilities. Red Desert, which represents over 90% of MGR’s cash flow, includes the Patrick Draw processing plant with a capacity of 125 MMcf/d, the Red Desert processing plant with a capacity of 48 MMcf/d, 1,295 miles of gathering lines, and related facilities. Rendezvous owns a 338-mile mainline gathering system serving the Jonah and Pinedale Anticline fields in southwestern Wyoming that delivers gas to WES’s Granger Complex and other locations. Red Desert and Rendezvous are together expected to generate over 98% of MGR’s operating cash flows. The transaction will be immediately accretive to the Partnership, with the acquisition price representing an approximate 7x multiple of the assets’ forecasted earnings before interest, taxes, depreciation and amortization for the next 12 months.
To manage the commodity-price risk associated with these assets, the Partnership and Anadarko will enter into five-year, fixed-price commodity swap agreements. Consistent with the swap arrangements put in place with previous transactions, the agreements will cover all non-fee-based system volumes.
Western Gas expects the acquisition to be financed through approximately (i) $160 million of cash on hand, (ii) a $300 million draw on the Partnership’s revolving credit facility, and (iii) the issuance of 632,783 common units to Anadarko and 12,914 general partner units to Western Gas Holdings, LLC, the Partnership’s general partner, at an implied price of approximately $37.38 per unit.
Western Gas expects the transaction to close in January 2012, with an effective date of January 1, 2012.