American Midstream's 'Strategic And Accretive' Acquisitions Resulted In A 20% Spike

Shares of American Midstream Partners LP AMID surged higher by more than 20 percent during Monday's after-hours session following the company's announcement of several "strategic and accretive" acquisitions.

American Midstream said it acquired: 1) interests in the Destin natural gas pipeline and the Tri-states and Wilprise natural gas liquids pipelines, 2) a majority interest in crude, natural gas, and salt water onshore and offshore piplies in the Gulf of Mexico, 3) an incremental 1 percent interest in Delta House, a semi-submersible floating production system in the Gulf of Mexico - bringing its total ownership to around 14 percent.

The total consideration for the acquisitions was $225 million. The company also added it intends to acquire a stake in another offshore natural gas pipeline in the second quarter of 2016.

American Midstream expects the acquisitions to result in a 100 percent year-over-year growth in adjusted EBITDA and distributable cash flow.

"We are pleased to announce strategic and accretive acquisitions in the midst of a difficult environment that expand our midstream footprint and further diversify our cash flow profile with investment grade-rated producer customers," commented Lynn Bourdon, Chairman, President and Chief Executive Officer. "The acquisition of strategic midstream infrastructure serving prolific areas of the Gulf of Mexico is an important step towards transforming American Midstream into a significant and integrated participant in offshore infrastructure, particularly in the deep-water. Our combined interests in the Destin and High Point gathering and transmission systems cover more than 10,000 square miles of active production in the Gulf.

"In addition, the onshore segment of Destin extends our gas transmission footprint into an active region serving the southeast marketplace. The additional pipeline interests increase our size and scale through incremental fee-based cash flows supported primarily by take-or-pay contracts and life-of-lease dedications. When combined with our onshore gathering, processing, transmission and terminals infrastructure, we remain well positioned to continue operating successfully through the current industry downturn, while positioning the Partnership to achieve significant long-term growth as industry conditions improve.