American Midstream Partners LP (NYSE: AMID) has acquired Costar Midstream Energy LLC from Energy Spectrum Capital and Costar management for approximately $470 million.
Founded in 2011 by current management and Energy Spectrum, Costar is an onshore gathering and processing company with its primary gathering, processing, fractionation and off-spec condensate treating and stabilization assets focused in East Texas and the Permian Basin, with a significant crude oil gathering system project underway in the Bakken Shale.
The acquisition was funded with 6.9 million American Midstream common units issued directly to Dallas, TX-based private equity firm Energy Spectrum and Costar senior management, which are subject to customary lock-up provisions, and $272 million of cash from borrowings under the partnership’s revolving credit facility and proceeds from the August 2014 private placement of common units.
Total acquisition consideration for Costar equates to an Adjusted EBITDA multiple of approximately 10.5x for the full-year 2015. In addition, American Midstream expects to invest $70 million to $80 million over the next 12-18 months to complete Bakken, Longview rail, and Permian off-spec condensate blending development projects.
Denver-based American Midstream is a growth-oriented limited partnership formed to own, operate, develop and acquire a diversified portfolio of midstream energy assets. American Midstream provides midstream services in the Texas, North Dakota, Gulf Coast, and Southeast regions of the United States.
Simmons & Company International served as the exclusive financial advisor to Costar.