USA Compression Partners to Acquire Compression Business from Energy Transfer Partners
-
Acquisition by
USA Compression of 1.6 million horsepower expandsUSA Compression’s geographic reach into active basins, includingEagle Ford Shale ,Gulf Coast , Rockies andPermian Basin - Essentially doubles USA Compression’s fleet to 3.4 million horsepower; enhancing USA Compression’s focus on large horsepower installations
- Transaction structure strengthens USA Compression’s balance sheet and distribution coverage levels
-
Enables ETP to reduce leverage with
$1.225 billion in cash consideration, strengthening ETP’s balance sheet -
Energy Transfer Equity to acquire the general partner interest inUSA Compression
This press release features multimedia. View the full release here: http://www.businesswire.com/news/home/20180116005771/en/
Transaction Impact
The transaction is expected to be accretive to USAC’s distributable cash
flow in 2018. In addition, as discussed in more detail below, ETP’s
receipt of a special class of common equity that will not pay
distributions for the first year will provide for increased
The transaction is also expected to strengthen ETP’s balance sheet by
allowing ETP to use the approximately
CDM currently owns and operates approximately 1.6 million horsepower of natural gas compression and is focused primarily on large horsepower applications. The acquisition of CDM is expected to provide significant benefits for USAC unitholders as the combined business will have increased geographic coverage and will be one of the leading domestic compression providers. The acquisition will further expand USAC’s geographic presence into regions where USAC is currently underrepresented and will result in USAC having broad coverage across U.S. regions. As part of its overall service offerings, CDM also provides a full range of gas treating and emissions testing services. CDM’s treating activities will also complement USAC’s growing station services offerings, in which USAC provides turnkey gas handling solutions for customers. With over 70% of horsepower greater than 1,000 horsepower and an average unit size of approximately 700 horsepower, the CDM fleet has an average age of approximately 7 years and a current operating utilization rate of 87%. On a pro forma combined basis, USAC will own and operate a compression fleet of approximately 3.4 million HP.
For 2018, CDM’s EBITDA is estimated to be in the range of
Management Commentary
"In addition to bringing on the compression and treating assets, we look forward to welcoming talented and skilled CDM employees, who have built the company into a strong market participant, into the USAC organization. This transaction gives USAC the geographic reach to compete in all the active producing regions.”
Transaction Details
The terms of the Contribution are governed by a contribution agreement,
pursuant to which ETP will contribute the CDM business to USAC in
exchange for (i)
The terms of the GP Acquisition are governed by a purchase agreement,
pursuant to which ETE will acquire (i) all of the equity interests in
USAC’s general partner,
The terms of the IDR/GP Restructuring are governed by an equity restructuring agreement, pursuant to which ETE will cause USAC GP to cancel the IDRs and convert USAC GP’s general partner interest in USAC into a non-economic general partner interest (the “General Partner Interest”) . In exchange for the IDR cancellation and the conversion of the General Partner Interest, USAC will issue 8.0 million USAC common units to USAC GP.
USAC has obtained, subject to customary closing conditions, committed
financing for the
The Contribution, the GP Acquisition and the IDR/GP Restructuring are expected to close during the first half of 2018, subject to customary closing conditions, including approval pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
Advisors
Conference Call Information
USAC management will discuss the transaction during an investor
conference call starting at
By Phone: | Dial (800) 239-9838 inside the U.S. and Canada at least 10 minutes before the call and ask for the USA Compression Partners Conference Call. Investors outside the U.S. and Canada should dial (323) 794-2551. The passcode for both is 1388911. | |
A replay of the call will be available through January 23, 2018. Callers inside the U.S. and Canada may access the replay by dialing (888) 203-1112. Investors outside the U.S. and Canada should dial (719) 457-0820. The passcode for both is 1388911. | ||
By Webcast: |
Connect to the webcast via the “Events” page of USA Compression’s Investor Relations website at http://investors.usacpartners.com. Please log in at least 10 minutes in advance to register and download any necessary software. A replay will be available shortly after the call. |
|
ABOUT THE PARTNERSHIPS
FORWARD-LOOKING STATEMENTS
This press release includes “forward-looking” statements.
Forward-looking statements are identified as any statement that does not
relate strictly to historical or current facts. Statements using words
such as “anticipate,” “believe,” “intend,” “project,” “plan,” “expect,”
“continue,” “estimate,” “goal,” “forecast,” “may” or similar expressions
help identify forward-looking statements. ETE, ETP and USAC cannot give
any assurance that expectations and projections about future events will
prove to be correct. Forward-looking statements are subject to a variety
of risks, uncertainties and assumptions. These risks and uncertainties
include the risks that the proposed transactions may not be consummated
or the benefits contemplated therefrom may not be realized. Additional
risks include: the ability to obtain requisite regulatory approval and
the satisfaction of the other conditions to the consummation of the
proposed transactions, the potential impact of the announcement or
consummation of the proposed transactions on relationships, including
with employees, suppliers, customers, competitors and credit rating
agencies, the ability to achieve revenue, DCF and EBITDA growth, and
volatility in the price of oil, natural gas, and natural gas liquids.
Actual results and outcomes may differ materially from those expressed
in such forward-looking statements. These and other risks and
uncertainties are discussed in more detail in filings made by ETE, ETP
and USAC with the
The information contained in this press release is available at www.energytransfer.com and www.usacompression.com.
View source version on businesswire.com: http://www.businesswire.com/news/home/20180116005771/en/
Source:
USA Compression
Matt Liuzzi, 512-369-1624
Chief
Financial Officer
mliuzzi@usacompression.com
or
Energy
Transfer
Investor Relations:
Helen Ryoo,
214-981-0795
or
Lyndsay Hannah, 214-981-0795
or
Brent
Ratliff, 214-981-0795
or
Media Relations:
Vicki
Granado, 214-840-5820