Azure Midstream Energy has agreed to acquire Marlin Midstream Partners to form a midstream partnership worth about $500m.
The definitive agreements with Marlin and its sponsor, NuDevco Midstream Development, will allow Azure to purchase 100% of Marlin’s general partner and 90% ownership of the total outstanding incentive distribution rights (IDRs).
Marlin will buy in a dropdown acquisition Azure’s Legacy gathering system for $162.5m.
The legacy system features about 658 miles of high- and low-pressure gathering lines primarily under fixed-fee contracts that serve around 100,000 acres mostly in the Cotton Valley formation in east Texas and northern Louisiana with access to seven major downstream markets.
Azure will retain the Center gathering system and the Holly gathering system at the general partner level for future potential dropdown acquisitions into Marlin over time.
The Center system features around 372 miles of high-pressure pipeline serving various formations, including the Haynesville, Bossier and the James Lime formation across 370,000 gross acres primarily located in east Texas.
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By GlobalDataThe Holly system comprises of approximately 335 miles of high- and low-pressure pipeline serving the Haynesville and Bossier Shale formations and the Cotton Valley formation across approximately 69,000 acres primarily located in northern Louisiana.
The proposed transactions are expected to be completed in the first quarter of 2015.
Azure Midstream Energy chief executive officer, president and director I.J. "Chip" Berthelot said: "This transaction advances Azure’s strategic objectives of becoming part of a larger, public MLP capable of providing access to growth capital for acquisitions, and further diversifies our customer base and midstream service offerings by expanding Azure with Marlin’s new and efficient processing assets within our core areas."
