Atlas Pipeline Partners – APL – To Acquire Cardinal Midstream

Atlas Pipeline Partners, L.P. (NYSE: APL) announced that the Partnership has executed a definitive agreement to acquire all equity interests representing all of the operating assets of Cardinal Midstream, LLC (“Cardinal”), a privately owned midstream operator, for $600 million in cash.  The transaction, which is expected to close by the end of 2012, is subject to certain regulatory approvals, customary closing conditions, and purchase price adjustments.

Partnership to acquire all operating assets from Cardinal Midstream, LLC

  • Transaction is expected to be immediately accretive to DCF by 3% to 5% in 2013 and 8% to 10% in 2014
  • Atlas Pipeline increases 2013 EBITDA guidance by over 20% to $310 to $360 million
  • Provides new entry as the largest midstream processer in liquids-rich basin of Arkoma-Woodford
  • Majority of Cardinal Midstream’s cash flows derived from fixed fee contracts
  • Acquisition includes 60% operated interest in Centrahoma JV with MarkWest Energy Partners
  • Owned and/or operated assets include 220 MMcfd of processing capacity and associated gathering lines as well as gas treating business

As a result of the transaction, the partnership is increasing EBITDA guidance for 2013 by over 20% from $250-300 million to $310-360 million.  The transaction is expected to be immediately accretive to distributable cash flow per unit by 3-5% in 2013 and 8-10% in 2014.  Expected EBITDA from the Cardinal assets is forecasted to be approximately $60 million in 2013, and approximately $70 million and $80 million in 2014 and 2015, respectively.

The owned and/or operated assets will include three cryogenic processing plants totaling 220 MMcfd in processing capacity, 66 miles of associated gathering pipelines, and a gas treating business that includes 17 treating facilities located in numerous hydrocarbon basins.  Over 80% of Cardinal’s current gross margin is derived from fixed fee contracts.

About Atlas Pipeline Partners, L.P. – APL

Atlas Pipeline Partners, L.P. (APL) is active in the gathering and processing segments of the midstream natural gas industry.  In Oklahoma, southern Kansas, northern and western Texas, and Tennessee, APL owns and operates nine active gas processing plants as well as approximately 9,700 miles of active intrastate gas gathering pipeline.  APL also has a 20% interest in West Texas LPG Pipeline Limited Partnership, which is operated by Chevron Corporation.

About Atlas Energy, L.P. – ATLS

Atlas Energy, L.P. (NYSE: ATLSis a master limited partnership which owns all of the general partner Class A units and incentive distribution rights and an approximate 43% limited partner interest in its upstream oil & gas subsidiary, Atlas Resource Partners, L.P. Additionally, Atlas Energy owns and operates the general partner of its midstream oil & gas subsidiary, Atlas Pipeline Partners, L.P., through all of the general partner interest, all the incentive distribution rights and an approximate 11% limited partner interest.

edliston

edliston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.