American Midstream to Reduce Capex in 2016 as it Completes Current Projects

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Researched by Industrial Info Resources (Sugar Land, Texas)--American Midstream Partners LP (NYSE:AMID) (Denver, Colorado) is expected to reduce growth capital expenditures by at least 56% next year as it wraps up several pipeline and terminal projects, according to company. Growth capital expenditures are forecast to drop to a $45 million-to-$55 million range in 2016, from $125 million this year. Industrial Info is tracking seven active American Midstream projects worth $258 million.

Chief Executive Officer Steve Bergstrom outlined the projects during the company's earnings conference call.

Construction is nearly complete on the Republic crude-oil gathering, storage, blending and take-away system, with operations expected to start in early 2016, Bergstrom said. Industrial Info is tracking three related projects with a combined worth of $240 million, including the 170-mile Shiner crude-oil gathering field pipeline system, a storage terminal and a terminal pump station.

The system, located south of Shiner, Texas, will gather crude oil from about 200 existing wells--expandable to 1,400 wells--in the Eagle Ford Shale and store the crude oil at the planned terminal, for blending and export of 40,000 BBL/d to the market in Houston, Texas. There are options to further expand pipeline access to other Gulf Coast markets. The system will provide midstream services to Penn Virginia Corporation (NYSE:PVA) (Radnor, Pennsylvania). American Midstream will operate the system and perform various related functions. However, American Midstream is not including the Republic system in its guidance for 2016 as a result of challenging market conditions and Penn Virginia's current drilling plan, Bergstrom said.

Also, construction of American Midstream's rail terminal in Longview, Texas, is nearly complete, Bergstrom said, and construction is expected to be completed in first-quarter 2016 for an additional 250,000 barrels of storage capacity at its terminal in Harvey, Louisiana. The Harvey terminal has a current storage capacity of 535,000 barrels.

American Midstream reported a net loss of $4.7 million in third-quarter 2015, compared with a $2.5 million loss in the same period a year earlier. Third-quarter revenue totaled $55.6 million, down from $70.3 million a year earlier. Bergstrom said the company experienced lower-than-expected contributions from an off-spec condensate treating facility in East Texas, seasonally lower contributions from its Transmission segment, and some project startup delays.

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