Antero to buy midstream assets from Crestwood

Antero Midstream Corp plans to buy Marcellus Shale gas gathering and compression assets from Crestwood Equity Partners for $205 million.

The assets include 72 miles of dry gas gathering pipelines and nine compressor stations with approximately 700 MMcf/d of compression capacity.

Current throughput on the system is approximately 200 MMcf/d, resulting in significant available capacity for growth without significant capital investment. Throughput will be gathered and compressed under the existing agreement, which is substantially similar to Antero Midstream’s gathering and compression agreement with Antero Resources, but not considered in the low pressure gathering rebate volumes with Antero Resources.

The transaction will be financed with borrowings under Antero Midstream’s revolving credit facility. The transaction, which is expected to close in 4Q22, is subject to customary regulatory approvals.

“Today’s bolt-on acquisition provides significant synergies that drive attractive economics and immediate Free Cash Flow accretion to Antero Midstream,” said Antero CEO Paul Rady. “The acquisition is consistent with Antero Midstream’s strategy of investing in infrastructure in the Marcellus, the lowest cost shale play, for high visibility customers, particularly Antero Resources.”

The acquisition adds approximately 425 undeveloped drilling locations and 120,000 gross dedicated acres from Antero Resources primarily in Harrison County, West Virginia. In addition, the acquisition increases Antero Midstream’s compression capacity by 20% and gathering pipeline mileage by 15%

Brendan Krueger, CFO of Antero Midstream, said, “We expect greater than 10% accretion to Free Cash Flow after dividends through 2026. This results in our ability to fund the transaction on a leverage neutral basis and continue to target 3.0x or lower leverage in 2024 and beyond.”

These assets located in Doddridge County and Harrison County, West Virginia, comprise a legacy gas system that was acquired in 2012 and was impacted in recent years by Crestwood’s anchor producer focusing development activity on the rich gas window of the Southwest Marcellus Shale.

As a result, Crestwood’s assets have been on natural field decline since 2017 and are non-core to Crestwood’s long-term growth strategy of becoming a leading midstream operator in the Williston, Delaware, and Power River basins. Crestwood intends to use the proceeds from the sale of these assets to enhance financial flexibility through a combination of debt reduction and opportunistic common unit repurchases.

“Over the past ten years, our employees in the Marcellus Shale have done an incredible job to build and operate a premier natural gas gathering and compression system, safely and sustainably. Many of Crestwood’s peer-group leading operational practices were developed in the Marcellus and form the basis of the best-in-class operations program across our midstream G&P portfolio. I would like to personally thank these employees for their dedication and loyalty,” said Crestwood CEO Robert G. Phillips.