Crestwood Midstream Lowers Full-Year View, to Buy Barnett Assets for $90 Million

07/23/2012| 06:48pm US/Eastern

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   By Nathalie Tadena 
 

Crestwood Midstream Partners LP (>> Crestwood Midstream Partners LP) lowered its full-year earnings guidance, noting the impact of delays in well completions on second-quarter results and moderated drilling activity in dry gas areas for the remainder of the year.

Shares were off 3.9% to $27.70 after hours. Through the close, the stock has fallen 9.2% since the start of the year.

The limited partnership cut its full-year view for adjusted earnings before interest, taxes, depreciation, amortization and accretion by $10 million to a range of $125 million to $130 million.

For the second quarter, Crestwood expects total gathering volumes of about 560 million cubic feet per day, down from 611 million cubic feet per day in the first quarter. The sequential decline is due to production-related factors including well shut-ins, reduced production from existing wells and lower gas lift volumes at its Alliance and Lake Arlington gathering systems. The company said reduced volumes are expected to result in adjusted EBITDA of about $28 million to $29 million. Crestwood plans to release results on Aug. 6.

The company also unveiled plans to acquire certain gathering and processing assets in the liquids-rich southwestern area of the Barnett Shale in Texas from Devon Energy Corp. (>> Devon Energy Corporation) for $90 million. Crestwood said the deal is expected to be immediately accretive to the company and partially offsets the impact of reduced industry-wide drilling activity in dry gas areas. The acquisition is expected to close in the third quarter. Additionally, the parties have agreed to enter into a 20-year gathering and compression agreement.

Higher Barnett Shale revenues have helped lift the company's top line in recent periods.

In February, Crestwood and a partner agreed to pay up to $415 million to acquire certain gathering assets from Antero Resources Appalachian Corp. in the red-hot Marcellus Shale region.

-Write to Nathalie Tadena at nathalie.tadena@dowjones.com

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