Western Gas acquires 100% interest in Springfield Pipeline from Anadarko

Western Gas Partners LP (NYSE: WES) has agreed to acquire a 100% interest in Springfield Pipeline LLC from Anadarko Petroleum Corp. for $750 million. Springfield's sole asset is a 50.1% interest in the Springfield oil and gas gathering system, which gathers Anadarko's and its partners' Eagle Ford shale production in South Texas.

The Springfield system consists of 548 miles of gas gathering lines with a capacity of 795 MMcf/d and 241 miles of oil gathering lines with a capacity of 130 Mbbl/d, located in Dimmit, La Salle, Maverick, and Webb counties in South Texas. The assets to be acquired also include 24 compressor stations with centralized delivery points, 260,000 barrels of oil storage capacity, and 75,000 bbl/d of stabilization capacity.

The Springfield system generates 100% fee-based revenues through gathering agreements with four shippers having primary terms through Dec. 31, 2034. Furthermore, approximately 75% of the annual volume forecast for the system is covered under minimum volume commitments from the four shippers throughout the term of the agreements.

The Partnership intends to finance the acquisition through the issuance of $449 million in aggregate amount of 8.5% perpetual convertible preferred units to First Reserve Advisors LLC and Kayne Anderson Capital Advisors LP, at a price of $32 per unit, the issuance of 1,253,761 and 835,841 WES common units at a price of $29.91 per common unit to Anadarko and Western Gas Equity Partners LP (NYSE: WGP), respectively, and the borrowing of $247.5 million on its revolving credit facility.

The transaction is expected to close by March 15, and will be immediately accretive to the Partnership, with the acquisition price representing an approximate 5.8 times multiple of the assets' forecasted 2016 earnings before interest, taxes, depreciation, and amortization.

The terms of the acquisition were unanimously approved by the board of directors of the Partnership's general partner, and by the board's special committee, which is composed entirely of independent directors. The Partnership's special committee engaged Evercore Partners to act as its financial advisor and Bracewell LLP to act as its legal advisor. The WGP special committee engaged Robert W. Baird & Co. Incorporated to act as its financial advisor, and Baker Botts LLP to act as its legal advisor with respect to its purchase of WES common units.

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