Atlas Pipeline (APL) Updates on Organic Growth; Raises Lower-End of FY11 DCF Outlook
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Financial Fact:
Equity income in joint ventures: -4.71M
Today's EPS Names:
SFST, VLTO, CLIR, More
Financial Fact:
Equity income in joint ventures: -4.71M
Today's EPS Names:
SFST, VLTO, CLIR, More
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Atlas Pipeline Partners, L.P. (NYSE: APL) updates on organic growth initiatives.
From the release: "Expansion of WestOK (Chaney Dell) Processing System
The WestOK system will be adding a 200 million cubic feet per day (mmcfd) expansion to its Waynoka plant to handle the exciting increases in production from horizontal drilling in the Mississippian Limestone and Carbonate formations in Northwest Oklahoma and Southern Kansas. The oil wells being drilled in the Mississippian play are producing large amounts of associated gas high in natural gas liquids (content, adding economic value for both the producers and processors like Atlas Pipeline.
This additional 200 mmcfd will increase the processing capacity at the Waynoka plant to 400 mmcfd and in the WestOK system cumulatively to 428 mmcfd. At present, the system is being forced to bypass and offload approximately 30 mmcfd to third parties because of lack of processing capacity. Capital costs for the WestOK expansion are expected to be approximately $175 million, including plant construction cost of approximately $70 million, additional plant compression and associated pipeline costs of approximately $55 million, and a $50 million debottlenecking project of the gathering system, which includes construction of a 40-mile, 24-inch high pressure gathering header pipeline. This expansion is expected to begin service by the middle of 2012.
Expansion of Velma Processing System
The high pressure Madill to Velma (MTV) line, completed in the summer of 2009, has met immediate success and for the first time the system is approaching its full capacity of 100 mmcfd and potential intake continues to climb.
To keep pace with this growth, Atlas Pipeline will now expand the Velma system by adding a 60 mmcfd cryogenic plant, thereby increasing processing capacity to 160 mmcfd. The Partnership also is taking related steps to increase takeaway capacity. First, Atlas Pipeline will obtain an additional 45 mmcfd of takeaway capacity into the Kinder Morgan Energy Partners’ (NYSE: KMP) NGPL line, bringing the total available for takeaway into NGPL of 100 mmcfd. Secondly, in the early part of 2012, the Partnership will begin utilizing an additional residue gas delivery point that will increase takeaway capacity by an additional 100 mmcfd into Enogex, LLC. The cumulative cost of the additions is expected to be approximately $75 million and all measures are expected to be in service during the first half of 2012.
Expansion of WestTX (Midkiff/Benedum) Processing System
Due to explosive growth in production from the Permian basin, including the prolific Spraberry and Wolfberry formations, the Partnership’s WestTX facility is currently at capacity and will now be expanding for the second time in less than 18 months. In 2009, Atlas Pipeline expanded the WestTX system in by constructing the 150 mmcfd Consolidator plant, a state-of-the-art cryogenic processing facility, and removed the 110 mmcfd Midkiff plant from service. The Consolidator plant added an incremental 40 mmcfd to bring processing capacity to the current level of 195 mmcfd, while improving ethane recoveries and decreasing operating expenses. This increased and improved capacity has been already fully utilized as of today. Accordingly, the Partnership will refurbish and return to service the 60 mmcfd cryogenic processing skid from the retired Midkiff plant.
The restart of the cryogenic skid will expand the processing capacity at the WestTX system by 60 mmcfd, increasing total processing capacity to 255 mmcfd. The total cost, including all associated gathering pipeline and compression associated with the expansion is expected to be $15 million, with an expected in-service date in the third quarter of 2011.
Acquisition of 20% Interest in West Texas LPG Limited Partnership
The Partnership has closed on a previously announced transaction to acquire a 20 percent interest in West Texas LPG Pipeline Limited Partnership from Buckeye Partners, L.P. (NYSE: BPL) for $85 million. WTLPG owns a 2,295 mile common carrier pipeline system that transports NGLs from New Mexico and Texas to Mont Belvieu for fractionation. The pipeline is operated by majority (80%) owner, Chevron Pipe Line Company, a subsidiary of Chevron Corporation (NYSE: CVX).
The pipeline transports NGL liquids to Mont Belvieu from the Permian Basin, Barnett Shale, and has an interconnection to the Rockies through Enterprise Products Partners (NYSE: EPD) Rocky Mountain MAPL system. The WTLPG pipeline is connected to the Partnership’s WestTX system. The asset provides stable fee-based cash flows to the Partnership’s contract mix. Upon closing, the transaction will be immediately accretive to Distributable Cash Flow."
Atlas Pipeline now expects 2011 EBITDA to range between $170 million to $205 million, up from $160 million to $200 million. Further, the Partnership is also updating guidance for 2011 Distributable Cash Flow (DCF) per unit to $2.00 to $2.60 per unit, up from $1.80 to $2.60 per unit previously stated.
From the release: "Expansion of WestOK (Chaney Dell) Processing System
The WestOK system will be adding a 200 million cubic feet per day (mmcfd) expansion to its Waynoka plant to handle the exciting increases in production from horizontal drilling in the Mississippian Limestone and Carbonate formations in Northwest Oklahoma and Southern Kansas. The oil wells being drilled in the Mississippian play are producing large amounts of associated gas high in natural gas liquids (content, adding economic value for both the producers and processors like Atlas Pipeline.
This additional 200 mmcfd will increase the processing capacity at the Waynoka plant to 400 mmcfd and in the WestOK system cumulatively to 428 mmcfd. At present, the system is being forced to bypass and offload approximately 30 mmcfd to third parties because of lack of processing capacity. Capital costs for the WestOK expansion are expected to be approximately $175 million, including plant construction cost of approximately $70 million, additional plant compression and associated pipeline costs of approximately $55 million, and a $50 million debottlenecking project of the gathering system, which includes construction of a 40-mile, 24-inch high pressure gathering header pipeline. This expansion is expected to begin service by the middle of 2012.
Expansion of Velma Processing System
The high pressure Madill to Velma (MTV) line, completed in the summer of 2009, has met immediate success and for the first time the system is approaching its full capacity of 100 mmcfd and potential intake continues to climb.
To keep pace with this growth, Atlas Pipeline will now expand the Velma system by adding a 60 mmcfd cryogenic plant, thereby increasing processing capacity to 160 mmcfd. The Partnership also is taking related steps to increase takeaway capacity. First, Atlas Pipeline will obtain an additional 45 mmcfd of takeaway capacity into the Kinder Morgan Energy Partners’ (NYSE: KMP) NGPL line, bringing the total available for takeaway into NGPL of 100 mmcfd. Secondly, in the early part of 2012, the Partnership will begin utilizing an additional residue gas delivery point that will increase takeaway capacity by an additional 100 mmcfd into Enogex, LLC. The cumulative cost of the additions is expected to be approximately $75 million and all measures are expected to be in service during the first half of 2012.
Expansion of WestTX (Midkiff/Benedum) Processing System
Due to explosive growth in production from the Permian basin, including the prolific Spraberry and Wolfberry formations, the Partnership’s WestTX facility is currently at capacity and will now be expanding for the second time in less than 18 months. In 2009, Atlas Pipeline expanded the WestTX system in by constructing the 150 mmcfd Consolidator plant, a state-of-the-art cryogenic processing facility, and removed the 110 mmcfd Midkiff plant from service. The Consolidator plant added an incremental 40 mmcfd to bring processing capacity to the current level of 195 mmcfd, while improving ethane recoveries and decreasing operating expenses. This increased and improved capacity has been already fully utilized as of today. Accordingly, the Partnership will refurbish and return to service the 60 mmcfd cryogenic processing skid from the retired Midkiff plant.
The restart of the cryogenic skid will expand the processing capacity at the WestTX system by 60 mmcfd, increasing total processing capacity to 255 mmcfd. The total cost, including all associated gathering pipeline and compression associated with the expansion is expected to be $15 million, with an expected in-service date in the third quarter of 2011.
Acquisition of 20% Interest in West Texas LPG Limited Partnership
The Partnership has closed on a previously announced transaction to acquire a 20 percent interest in West Texas LPG Pipeline Limited Partnership from Buckeye Partners, L.P. (NYSE: BPL) for $85 million. WTLPG owns a 2,295 mile common carrier pipeline system that transports NGLs from New Mexico and Texas to Mont Belvieu for fractionation. The pipeline is operated by majority (80%) owner, Chevron Pipe Line Company, a subsidiary of Chevron Corporation (NYSE: CVX).
The pipeline transports NGL liquids to Mont Belvieu from the Permian Basin, Barnett Shale, and has an interconnection to the Rockies through Enterprise Products Partners (NYSE: EPD) Rocky Mountain MAPL system. The WTLPG pipeline is connected to the Partnership’s WestTX system. The asset provides stable fee-based cash flows to the Partnership’s contract mix. Upon closing, the transaction will be immediately accretive to Distributable Cash Flow."
Atlas Pipeline now expects 2011 EBITDA to range between $170 million to $205 million, up from $160 million to $200 million. Further, the Partnership is also updating guidance for 2011 Distributable Cash Flow (DCF) per unit to $2.00 to $2.60 per unit, up from $1.80 to $2.60 per unit previously stated.
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