Summit Midstream Partners LP (SMLP), the natural-gas pipeline partnership that’s increased 54 percent since its September initial public offering, announced $460 million of acquisitions in the Bakken and Marcellus Shale regions to boost investor payout.
Summit paid $250 million for a pipeline system owned by its parent, Summit Midstream Partners LLC, in the Bakken region and agreed to pay $210 million for Marcellus assets from Markwest Energy Partners LP (MWE), the Dallas-based partnership said today in a statement.
The Bakken transaction is the first between the partnership and the parent controlled by Energy Capital Partners LP, based in Short Hills, New Jersey. Summit forecast a fourth quarter payout of 47.2 cents to 48.8 cents a unit based on the acquisitions, up from 42 cents this quarter.
“Both systems are underpinned by long-term contracts with leading producers,” Chief Executive Officer Steve Newby said in today’s statement. “These acquisitions will be immediately accretive to our distributable cash flow on a per-unit basis.”
Summit’s purchase of gas-gathering assets from Denver-based Markwest marks its entrance into the Marcellus, according to the statement. Summit already owned gas-gathering systems in the Piceance Basin of Colorado and the Barnett Shale region of Texas, according to its website.
The partnership will finance the deals with bank credit and by issuing $150 million of equity to Summit’s parent. Energy Capital Partners, General Electric Co. (GE)’s Energy Financial Services unit and management control the limited partnership through ownership of its general partner, according to its website. Energy Capital owed 71 percent of the limited partnership units as of Dec. 31, according to a filing.
The transactions were announced before regular trading began in New York. Summit Midstream declined 0.4 percent yesterday to $30.85. That’s 54 percent above the initial offer price of $20.
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