American Midstream Partners Cuts 2015 Capex 10% Amid Delays in Eagle Ford, Bakken Projects

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Researched by Industrial Info Resources (Sugar Land, Texas)--American Midstream Partners LP (NYSE:AMID) (Denver, Colorado) reported it has reduced its expected capital expenditures (capex) for 2015 by about 10% to a range of $115 million to $125 million, amid a delay in certain growth capital projects. Industrial Info is tracking six active American Midstream projects, which have a combined investment value of $282 million.

One of the delays involves the Republic Midstream crude oil gathering, storage, blending and intermediate takeaway system in the Eagle Ford shale. American Midstream has an option to acquire 50% of the system. However, prolonged rainfall in the region in the second quarter delayed completion of the system, and commencement of operations is expected in late 2015. American Midstream earlier said it intended to exercise its option to acquire 50% of the system in the second half of this year, but now anticipates making the acquisition in 2016.

Industrial Info is tracking four major American Midstream and Republic Midstream projects, which are valued at a total of $300 million, including the 170-mile crude oil pipeline system in the Eagle Ford and an associated terminal.

American Midstream Chief Executive Officer Steve Bergstrom said during the company's earnings conference call there was also a two-month delay in the company's Bakken crude oil pipeline system to transport up to 40,000 barrels per day to the Tesoro Logistics pipeline near Watford City, North Dakota. The delay, caused by a contractual dispute with the anchor producer customer, has since been resolved, and the system began operations this month, he said.

Second-quarter 2015 capex totaled $40.8 million, including $900,000 for maintenance.

Other projects are on schedule, Bergstrom said, including a rail facility in Longview, Texas, and a Permian off-spec treating facility, which are expected to be brought online in the fourth quarter. Also, he noted the 300,000-barrel expansion of the company's storage terminal at Harvey, Louisiana, which can now hold 535,200 barrels. Construction of an additional 150,000 barrels is under way, with completion expected by the end of the year.

Bergstrom also noted plans to acquire a stake in Delta House, a fee-based semi-submersible floating production system in the Gulf of Mexico. American Midstream will acquire the stake for $162 million via a drop down transaction with an affiliate of ArcLight Capital Partners (Boston, Massachusetts), which controls the general partner of American Midstream.

In all, American Midstream anticipates about $1 billion of fee-based growth through 2017, Bergstrom said.

The partnership reported a second-quarter net loss of $2.1 million, compared with a net loss of $1.7 million in the same quarter a year earlier. Generated adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $14.5 million for the second quarter, compared with $6.8 million a year earlier. Total revenue for the quarter was $67.5 million, down from nearly $77.7 million in second-quarter 2014.

For related information, see May 13, 2015, article--American Midstream Partners Seeks Bigger Role in Bakken, Eagle Ford, Keeps 2015 Capex Around $130 Million.

For more information on the state of the U.S. midstream market, see August 12, 2015, article - U.S. Pipelines Face Massive Backlog, Permitting Problems.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and ten international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.