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Summit Midstream Partners, LP Announces $460 Million Of Acquisitions In Bakken And Marcellus Shale Plays And Revises 2013 Adjusted EBITDA And Distribution Guidance

Stocks in this article: SMLP

DALLAS, June 5, 2013 /PRNewswire/ -- Summit Midstream Partners, LP (NYSE: SMLP) today announced two separate acquisitions of unrelated natural gas gathering systems totaling $460 million in the Bakken and Marcellus shale plays.  The transactions will be financed under SMLP's recently upsized $600 million revolving credit facility and the issuance of $150 million of common units and general partner interests in SMLP to wholly-owned subsidiaries of Summit Midstream Partners, LLC ("Summit Investments").  SMLP expects these transactions to be immediately accretive to distributable cash flow on a per unit basis. 


Bison Midstream, LLC ("Bison") is engaged in associated natural gas gathering in Mountrail and Burke counties in North Dakota.  The Bison system consists of 300 miles of low-pressure and high-pressure gas gathering pipelines and six compressor stations with 5,950 horsepower of compression.  Total throughput capacity on the system is in the process of being expanded from approximately 20 million cubic feet per day ("MMcf/d") to 30 MMcf/d with the installation of new compression which is expected to be completed by the end of 2013.  Volume throughput on the Bison system is underpinned by minimum volume commitments from its anchor customers which represent, on average, approximately 80% of projected annual revenue over the next several years. 

SMLP closed and funded the $250 million drop down acquisition of Bison, an indirect, wholly-owned subsidiary of Summit Investments, with $200 million of cash drawn under SMLP's revolving credit facility and $50 million of common units and general partner interests in SMLP issued to wholly-owned subsidiaries of Summit Investments at a price of $31.53 per unit.  This price represents the five day volume weighted average price ("VWAP") of SMLP units as of the market close on June 3, 2013.

In a separate, unrelated transaction, on June 4, 2013, SMLP executed definitive agreements with an affiliate of MarkWest Energy Partners, L.P. ("MarkWest"), pursuant to which Mountaineer Midstream Company, LLC ("Mountaineer"), an indirect, wholly-owned subsidiary of SMLP, has agreed to acquire, for $210 million in cash, certain natural gas gathering and compression assets in the liquids-rich window of the Marcellus Shale Play, primarily located in Doddridge County, West Virginia (the "Mountaineer Gathering System").  The Mountaineer Gathering System consists of over 40 miles of newly constructed, high-pressure gas gathering pipelines, certain rights-of-way associated with the pipeline, and two compressor stations with over 21,000 horsepower of compression. This rich-gas gathering and compression system serves as a critical inlet to MarkWest's world-class Sherwood Processing Complex, which is currently being expanded from 400 MMcf/d to 800 MMcf/d.  The Mountaineer Gathering System is currently capable of delivering 550 MMcf/d to the Sherwood Processing Complex and is underpinned by a long-term, fee-based contract with an affiliate of Antero Resources, Inc.  The Mountaineer transaction is expected to close on or before June 30, 2013. 

The Mountaineer transaction will be financed with $110 million of borrowings under SMLP's recently upsized $600 million revolving credit facility and the issuance of $100 million of SMLP common units and general partner interests to wholly-owned subsidiaries of Summit Investments.  Summit Investments and SMLP have entered into a Unit Purchase Agreement pursuant to which Summit Investments has agreed to purchase the units at a price of $31.53 per unit.  This price represents the five day VWAP of SMLP units as of the market close on June 3, 2013.

Steve Newby, President & CEO of SMLP commented, "The acquisition of midstream assets in the Bakken and Marcellus shale plays, two of the most prolific unconventional resource basins in North America, will provide SMLP with larger scale to execute its growth strategy as well as greater geographic and customer diversification.  We are very excited about the acquisition of Bison, our first drop down transaction from Summit Investments, as well as the pending acquisition of strategically located, rich gas gathering infrastructure from MarkWest.  Consistent with SMLP's existing assets, both systems are underpinned by long-term contracts with leading producers in the Bakken and the Marcellus.  The anchor customers on both systems have provided either minimum volume commitments or minimum revenue commitments.  We believe that these acquisitions will be immediately accretive to our distributable cash flow on a per unit basis and will deliver significant value to our unitholders over the long-term."

"The Mountaineer acquisition will represent SMLP's initial entry into the Marcellus Shale, one of the largest, most active and prolific basins in North America.  We are excited about establishing a footprint in this world-class basin and beginning a strategic relationship with MarkWest.  We look forward to working with MarkWest on this and future opportunities to expand this relationship and complement its industry leading position in the Marcellus and Utica."  

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