Summit Buys Bakken, Marcellus Shale Assets for $460 Million

Summit Midstream Partners LP, the natural-gas pipeline partnership that’s increased 57 percent since its September initial public offering, announced $460 million of acquisitions in the Bakken and Marcellus fields.

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, the Dallas-based partnership said today in a statement.

Summit plans to nearly double the amount of gas it gathers on both systems. In the Bakken it expects to boost pipeline capacity to 30 million cubic feet a day from 19 million, according to a slide presentation to investors today. In the Marcellus, the system it acquired feeds into MarkWest’s Sherwood gas-processing plant, which is projected to double its capacity to 800 million cubic feet a day by 2014, Chief Executive Officer Steve Newby said on a call today.

“Both systems are underpinned by long-term contracts with leading producers,”said in today’s statement. “These acquisitions will be immediately accretive to our distributable cash flow on a per-unit basis.”

Dividend Increase

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.

Summit Midstream increased 3.1 percent to $31.81 at the close in New York, 59 percent above the initial offer price of $20.

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.’s Energy Financial Services unit and management control the limited partnership through ownership of its general partner, according to Summit’s website. Energy Capital owed 71 percent of the limited partnership units as of Dec. 31, according to a filing.

Evercore Partners Inc. advised the conflicts committee of the partnership and gave a fairness opinion on the purchase from the parent. Akin, Gump, Strauss, Hauer & Feld LLP was legal adviser. Barclays Plc and Vinson & Elkins LLP advised the parent on both transactions.

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