Enterprise Products Partners L.P.

SEC Filings

ENTERPRISE PRODUCTS PARTNERS L P filed this Form 10-K on 02/28/2018
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Note 12. Business Combinations

Acquisition of Azure Midstream
In April 2017, we closed the acquisition of a midstream energy business from Azure Midstream Partners, LP and its operating subsidiaries (collectively, “Azure”) for $191.4 million in cash.  The acquired business assets, which are located primarily in East Texas, include over 750 miles of natural gas gathering pipelines and two natural gas processing facilities (Panola and Fairway) with an aggregate processing capacity of 130 MMcf/d.  The acquired business primarily serves production from the Haynesville Shale and Bossier, Cotton Valley and Travis Peak formations.

The financial results of the acquired business are reflected in our consolidated results from April 30, 2017, which was the effective date of the Azure acquisition.  On a historical pro forma consolidated basis, our revenues, costs and expenses, operating income, net income attributable to Enterprise Products Partners L.P., and earnings per unit amounts for the years ended December 31, 2017 and 2016 would not have differed materially from those we actually reported had the Azure acquisition been completed on January 1, 2016 rather than April 30, 2017.

The following table presents the final fair value allocation of assets acquired and liabilities assumed in the Azure acquisition at April 30, 2017.

Assets acquired in business combination:
Current assets
Property, plant and equipment
Total assets acquired
Liabilities assumed in business combination:
Current liabilities
Long-term liabilities
Total liabilities assumed
Cash used for Azure acquisition

The contribution of this newly acquired business to our consolidated revenues and net income was not material for the year ended December 31, 2017.

Acquisition of EFS Midstream
In July 2015, we purchased EFS Midstream from affiliates of PXD and Reliance for approximately $2.1 billion, which was payable in two installments.  The initial payment of $1.1 billion was paid at closing on July 8, 2015.  The second and final installment of $1.0 billion was paid on July 11, 2016 using a combination of cash on hand and proceeds from the issuance of short-term notes under EPO’s commercial paper program.

The EFS Midstream System provides condensate gathering and processing services as well as gathering, treating and compression services for the associated natural gas.  Our primary purpose in acquiring the EFS Midstream System was to secure the underlying production, particularly the processed condensate, for our midstream asset network.  Under terms of the associated agreements, PXD and Reliance dedicated certain of their Eagle Ford Shale acreage to us under 20-year, fixed-fee gathering agreements that include minimum volume requirements for the first seven years.  PXD and Reliance also entered into related 20-year fee-based agreements with us for natural gas transportation and processing, NGL transportation and fractionation, and for processed condensate and crude oil transportation services.

In connection with the agreements to acquire EFS Midstream, we are obligated to spend up to an aggregate of $270 million on specified midstream gathering assets for PXD and Reliance, if requested by these producers, over a ten-year period.  If constructed, these new assets would be owned by us and be a component of the EFS Midstream System.