Under the terms of the deal, Energy Transfer Partners will sell its subsidiaries CDM Resource Management and CDM Environmental & Technical Services to USA Compression Partners.
CDM currently owns and operates approximately 1.6 million horsepower of natural gas compression. It also provides a full range of gas treating and emissions testing services. It also offers a full range of gas treating and emissions testing services, as part of its overall service offerings.
USA Compression said that the acquisition strengthens its balance sheet and distribution coverage levels as well as expands its geographic reach into active basins, including Eagle Ford Shale, Gulf Coast, Rockies and Permian Basin.
USAC President and CEO Eric Long said: “USAC’s acquisition of CDM is a logical combination of two leading compression service providers – each with nearly two decades of delivering exemplary levels of customer service.
"Operating in different areas of geographic focus with nominal overlap, CDM brings to USAC a complementary and standardized fleet of large horsepower, infrastructure-oriented equipment, a customer-focused operating philosophy and a strong employee base consistent with those of USAC’s."
Additionally, Energy Transfer Equity (ETE), which owns 100% of the incentive distribution rights (IDRs) of ETP, will acquire the ownership interests in the general partner of USAC and approximately 12.5 million USAC common units in exchange for $250m in cash.
Scheduled to be completed during the first half of 2018, the acquisition is subject to customary closing conditions, including approval pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
For the transaction, USAC has received, subject to customary closing conditions, committed financing for the $1.225bn cash consideration payable to ETP.
Image: USA Compression intends to strengthen its business with the acquaition of CDM. Photo: courtesy of adamr/FreeDigitalPhotos.net.
