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Crestwood Midstream Partners Expands Bakken Shale Footprint With $750 Million Acquisition Of Arrow Midstream

Stocks in this article: CMLPNRGM

HOUSTON, Oct. 10, 2013 /PRNewswire/ -- Crestwood Midstream Partners LP (NYSE: CMLP) ("Crestwood" or the "Partnership") today announced that its wholly-owned subsidiary, Crestwood Arrow Acquisition LLC ("Crestwood Arrow"), has entered into an agreement to acquire Arrow Midstream Holdings, LLC ("Arrow"), a privately-held midstream company, for approximately $750 million, subject to customary purchase price adjustments.  The acquisition marks a continuation of Crestwood's liquids-focused strategy by significantly expanding Crestwood's operational footprint in the Bakken Shale and highlights the immediate benefits of the merger of Crestwood and Inergy Midstream, which was completed on Monday, October 7, 2013.  The transaction is expected to be immediately accretive to Crestwood's estimated distributable cash flow per limited partner unit in 2014, with growing accretion thereafter based upon projected production increases from the Arrow assets. The transaction is expected to close in the fourth quarter of 2013.   

Arrow, through its wholly-owned subsidiaries, owns and operates substantial crude oil, natural gas and water gathering systems located on the Fort Berthold Indian Reservation in the core of the Bakken Shale in McKenzie and Dunn Counties, North Dakota. The system today consists of over 460 miles of gathering pipeline including 150 miles of crude oil gathering pipeline, 160 miles of natural gas gathering pipeline, and 150 miles of water gathering lines. Current volumes on the system are approximately 50,000 barrels per day ("Bbls/d") of crude oil, 15 million cubic feet per day ("MMcf/d") of rich natural gas and 8,500 Bbls/d of water. Additionally, the acquired assets include salt water disposal wells and a 23-acre central delivery point ("CDP") with multiple pipeline take-away outlets and a fully-automated truck loading facility.

The Arrow gathering systems are anchored by long-term, primarily fee-based, gathering contracts with blue chip producers who have dedicated over 150,000 acres to Arrow including more than 1,000 potential drilling locations on the acreage. The producer customers are all world-class shale developers who have substantial development programs on the dedicated acreage and have identified the Bakken Shale as a significant driver of their future production growth. The contracts provide for fixed-fee gathering services with annual escalators for crude, natural gas and water gathering services. There are currently eight drilling rigs running in the area of dedication with additional rig activity in areas immediately adjacent to the system.

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