A transformational merger between American Midstream Partners and JP Energy Partners will create a diversified midstream business in leading North American basins.
The combined partnership will have an estimated enterprise value of $2 billion and the improved scale and financial flexibility will result in investment in growth projects, third party acquisitions and potential drop downs from ArcLight Capital, which is the sponsor.
The combined entity is expected to generate pro-forma adjusted EBITDA of approximately $185 million.
The merged midstream business will operate in the Permian, Gulf of Mexico, Eagle Ford and Bakken.
Lynn Bourdon, chairman, president and CEO of American Midstream says: ‘The merger elevates and reshapes our two businesses into a new platform that we expect will allow for higher growth, new business opportunities and a stronger financial position than either company could achieve.
‘This transformational combination is the next logical step in expanding services from the wellhead to the end user market.’
The midstream infrastructure comprises, amongst others, more than 3,100 miles of gathering and transportation pipeline, over six million barrels of above-ground liquids storage capacity and the third largest wholesale propane business in the UDS.
Dan Revers, managing partner of ArcLight, adds: ‘We believe the merger between American Midstream and JP Energy makes a tremendous amount of sense, offering all stakeholders a solidified financial profile on a stronger, more diversified platform with multiple avenues for growth.’
The merger is expected to add complementary assets by leveraging combined positions in the Permian, crude oil, liquids, logistics and terminals in addition to $10 million of run-rate synergies.
The transaction is expected to close in late 2016 or early 2017.