American Midstream Completes Key Integration in Third-Quarter 2013, Expects $14 Million Full-Year Growth Capex

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Researched by Industrial Info Resources (Sugar Land, Texas)--American Midstream Partners LP (NYSE:AMID) (Denver, Colorado), a leading provider of midstream services for natural gas in the U.S. Southeast and Gulf Coast regions, reported solid overall gains for the third quarter of 2013. The company completed its integration of the High Point system, which significantly strengthened results in its Transmission segment, and benefited from higher throughput in its Gathering and Processing segment. The company reported a net loss of $2.56 million, compared with a loss of $4.28 million in third-quarter 2012.

American Midstream executives said that results better reflected the company's standing when using the "adjusted EBITDA" method, which deducts the effects of interest expenses; transaction costs; gains and losses on the sales of assets; depreciation; accretion; debt issuance costs; non-cash equity compensation expenses; unrealized gains and losses on commodity derivatives; losses on the impairment of property, plants and equipment; and various one-time income gains. Using this method for both years, the first quarter saw income of $7.1 million, compared with $4.07 million in the same period last year.

Total revenues stood at $76.58 million, a 40.91% increase from third-quarter 2012. The Gathering and Processing segment benefited from higher throughput from the Quivira and Burns Point systems, while the Transmission segment benefited from solid contributions from the High Point system. American Midstream acquired the gathering and transmission assets of High Point in the $90 million deal in April. However, NGL production at the Gathering and Processing segment's processing plants was lower, as were realized NGL prices.

Natural gas throughput volumes averaged 303.9 million cubic feet per day, compared with 245.4 million cubic feet per day in third-quarter 2012, while processed NGLs averaged 49,500 gallons per day, compared with 56,000 gallons per day. Natural gas throughput volumes averaged 698.5 million cubic feet per day, compared with 427.8 million cubic feet per day in the same period last year.

Capital expenditures totaled $4.3 million during the quarter, including $1.6 million that went toward new developments and $2.2 million that went toward maintenance-related efforts. For the first nine months of the year, capital expenditures totaled $16.8 million, including $10.5 million for new developments and $5.3 million for maintenance-related efforts.

As part of the ongoing coverage in its North American Oil & Gas Transmission Project Database, Industrial Info is tracking two operational natural gas transmission plants owned by American Midstream: the Decatur Natural Gas Compressor Station in Muscle Shoals, Alabama, and the Duncanville Bear Creek Compressor Station in Duncanville, Alabama.

"Regarding High Point, all aspects of the integration are complete, including the rollout of a new electronic bulletin board and commercial management system," said Steve Bergstrom, the executive president, chairman and chief executive officer of American Midstream, in a conference call. "We are excited to be working as one integrated team, and we are seeing the benefits of leveraging our collective expertise to further strengthen our commercial and operational capabilities, and position the company for consistent, long-term growth."

High Point Infrastructure Partners LLC (HPIP), which controls the general partner of American Midstream, expects to begin operations in the Eagle Ford Shale in mid-2014. In May of this year, HPIP entered into a long-term, fee-based agreement to provide midstream services to a large independent producer in Eagle Ford. The project is valued at between $65 million and $75 million.

"HPIP is constructing a full well-stream gathering and treating facility in Gonzales County, Texas," Bergstrom said. "HPIP selected and mobilized the EPC [engineering, procurement and construction] contactor, and all of the major services and equipment have been bid out or procured. The producer continues to improve production rates as it drills out the field, and we remain very optimistic about the long-term outlook for this project."

Capital expenditures for new developments (not including maintenance or the Eagle Ford project) are estimated to be $14 million for full-year 2013. Capital expenditures on the Eagle Ford project are expected to be between $90 million and $100 million. For 2014, the company expects to have $15 million to $20 million in organic growth projects.

Adjusted EBITDA is expected to be between $24 million and $27 million for full-year 2013, including benefits from the High Point project.

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