Western Gas Partners, LP (NYSE:WES) today announced that it has agreed
to acquire the Red Desert Complex and related assets, primarily located
in the greater Green River Basin of southwestern Wyoming, from Anadarko
Petroleum Corporation (NYSE:APC) for total consideration of $483 million.
"We continue to execute our strategy of growing the WES portfolio in
liquids-rich areas," said Western Gas Partners' President and Chief
Executive Officer Don Sinclair. "These assets are a great complement to
our existing footprint in the greater Green River Basin, which continues
to see solid resource development. As a result of our capital markets
activity in 2011, we are able to consummate this material transaction
while still maintaining conservative leverage ratios."
Under the terms of the acquisition agreement, Western Gas will purchase
Anadarko's 100-percent ownership interest in Mountain Gas Resources LLC
("MGR"), which owns the Red Desert Complex ("Red Desert"), a 22%
interest in Rendezvous Gas Services, L.L.C. ("Rendezvous"), and related
facilities. Red Desert, which represents over 90% of MGR's cash flow,
includes the Patrick Draw processing plant with a capacity of 125
MMcf/d, the Red Desert processing plant with a capacity of 48 MMcf/d,
1,295 miles of gathering lines, and related facilities. Rendezvous owns
a 338-mile mainline gathering system serving the Jonah and Pinedale
Anticline fields in southwestern Wyoming that delivers gas to WES's
Granger Complex and other locations. Red Desert and Rendezvous are
together expected to generate over 98% of MGR's operating cash flows.
The transaction will be immediately accretive to the Partnership, with
the acquisition price representing an approximate 7x multiple of the
assets' forecasted earnings before interest, taxes, depreciation and
amortization for the next 12 months.
To manage the commodity-price risk associated with these assets, the
Partnership and Anadarko will enter into five-year, fixed-price
commodity swap agreements. Consistent with the swap arrangements put in
place with previous transactions, the agreements will cover all
non-fee-based system volumes.
Western Gas expects the acquisition to be financed through approximately
(i) $160 million of cash on hand, (ii) a $300 million draw on the
Partnership's revolving credit facility, and (iii) the issuance of
632,783 common units to Anadarko and 12,914 general partner units to
Western Gas Holdings, LLC, the Partnership's general partner, at an
implied price of approximately $37.38 per unit.
Western Gas expects the transaction to close in January 2012, with an
effective date of January 1, 2012. Terms of the transaction were
approved by the Board of Directors of the Partnership's general partner
and by the Board's special committee, which is comprised entirely of
independent directors. The special committee engaged Tudor, Pickering,
Holt & Co. Securities, Inc. to act as its financial advisor and
Bracewell & Giuliani LLP to act as its legal advisor.
Western Gas Partners, LP is a growth-oriented Delaware limited
partnership formed by Anadarko Petroleum Corporation to own, operate,
acquire and develop midstream energy assets. With midstream assets in
East and West Texas, the Rocky Mountains and the Mid-Continent, the
Partnership is engaged in the business of gathering, compressing,
processing, treating and transporting natural gas for Anadarko and other
producers and customers. For more information about Western Gas
Partners, please visit www.westerngas.com.
This news release contains forward-looking statements. Western Gas
Partners believes that its expectations are based on reasonable
assumptions. No assurance, however, can be given that such expectations
will prove to have been correct. A number of factors could cause actual
results to differ materially from the projections, anticipated results
or other expectations expressed in this news release. These factors
include the ability to consummate the transactions contemplated by this
press release; the ability to meet financial guidance or distribution
growth expectations; the ability to obtain new sources of natural gas
supplies; the effect of fluctuations in commodity prices and the demand
for natural gas and related products; and construction costs or capital
expenditures exceeding estimated or budgeted costs or expenditures, as
well as other factors described in the "Risk Factors" section of the
Partnership's 2010 Annual Report on Form 10-K filed with the Securities
and Exchange Commission and other public filings and press releases by
Western Gas Partners. Western Gas Partners undertakes no obligation to
publicly update or revise any forward-looking statements.
Western Gas Partners, LP
Benjamin M. Fink, CFA, 832-636-6010
Chief Financial Officer and Treasurer