American Midstream Reaps Rewards from 2013 Acquisitions, Eyes Expansion in Eagle Ford in 2014

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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 in Texas, the Gulf Coast and the Southeastern U.S., benefited from two major acquisitions and higher condensate production in 2013. Industrial Info is tracking progress at three operational natural gas transmission plants owned by American Midstream in Alabama, and another in Mississippi, as part of the ongoing coverage in its North American Oil & Gas Transmission Project Database.

The company reported a net loss of $34.04 million for the year, compared with a loss of $6.51 million in 2012. During the year, American Midstream incurred $17 million in non-cash impairment charges on the sale of certain non-strategic Gathering and Processing assets in the second and fourth quarters; during the fourth quarter, the company incurred a $600,000 loss on similar assets in the Terminals segment.

American Midstream executives said that results better reflected the company's standing when using the "adjusted EBITDA" method, which deducts the effects of these and other exceptional factors, such as 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; and losses on the impairment of property, plants and equipment. Using this method, income stood for the year at $31.9 million, compared with $18.85 million in 2012.

Total revenues were reported to be $292.63 million, a 50.19% increase from 2012. The Transmission segment saw a sharp improvement in margins during the year, following two key acquisitions from affiliates of ArcLight Capital Partners LLC, which controls American Midstream's general partner: the April 2013 acquisition of the High Point system and the December 2013 acquisition of Blackwater Midstream Holdings LLC, which develops and operates terminal storage facilities. The deals were valued at $90 million and $60 million, respectively. The Blackwater acquisition gives American Midstream a total of 1.3 million barrels of terminal storage capacity at four sites: Brunswick, Georgia; Harvey, Louisiana; Westwego, Louisiana; and Salisbury, Maryland.

In late January, American Midstream made another significant acquisition from Penn Virginia Corporation for about $100 million: the Lavaca System, which is a natural gas-gathering system in the Eagle Ford Shale, in the Gonzales and Lavaca counties of Texas.

Higher condensate production from the Chatom system in Washington County, Alabama, boosted results for the Gathering and Processing segment. Natural gas throughput volumes were lower, however, due to lower volumes from an offshore pipeline system.

Capital expenditures were reported to total $4.8 million for the fourth quarter and $27.6 million for full-year 2013, with growth capital totaling $4.1 million and $20.5 million, respectively.

Industrial Info is tracking progress at American Midstream's Muscle Shoals Natural Gas Compressor Station and the Decatur Natural Gas Compressor Station in Muscle Shoals, Alabama; Duncanville Bear Creek Compressor Station in Duncanville, Alabama; and Bazor Ridge Gas Extraction Plant in Waynesboro, Mississippi.

"Since the closing of the Blackwater acquisition in mid-December, Blackwater has performed in-line with our expectations, with strong ancillary service revenues this winter, due to cold temperatures," said Steve Bergstrom, the executive chairman, president and chief executive officer of American Midstream, in a conference call. "We also made significant progress with several customers to secure firm storage contracts for the two available 50,000-barrel tanks at our Westwego site.

"We expect to receive our permit to commence operations at the Harvey brownfield site in the coming months, at which point we will begin construction of a deepwater ship dock that will allow Harvey to receive shipments from 700-foot vessels, significantly increasing the marketability of the site."

American Midstream executives are predicting between $55 million and $60 million in growth capital expenditures for 2014, about $30 million of which is tied to the Lavaca System. Adjusted EBITDA is expected to be between $41 million and $44 million. Bergstrom said that the company plans to "significantly increase" its presence in the Eagle Ford Shale this year.

"The Lavaca gathering system that we acquired from Penn Virginia is also performing in line with our acquisition expectations, and volumes are ramping up as expected," Bergstrom said in the conference call. "We are securing rights of way for the extension of the system, and will commence construction in the coming months. We are encouraged by the traction we are gaining with potential third parties in the area, and we believe there are attractive bolt-on projects that will expand our position in the region, including opportunities for gas gathering and processing; oil gathering and treating; and water gathering and disposal."

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Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine 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.