[Context: On July 31, Blackstone Energy Partners and Blackstone Capital Partners announced the acquisition of a 49.9% interest in an entity that holds a 65% interest in Rover Pipeline LLC from Energy Transfer. Other stakeholders are not disclosed but according Rover Pipeline’s FERC application, Energy Minerals Group (EMG) holds a 35% stake through American Energy Partners – Midstream, now known as Traverse Midstream. Based on the Blackstone valuation, EMG’s stake would be worth $1.69bn. Further details, advisors and related links are below.]
Traverse Midstream also holds a 25% membership interest in the Ohio Utica River System alongside Energy Transfer, which holds the other 75% interest, according to SEC filings. The system consists of 47 miles of 36-inch and 13 miles of 30-inch gathering trunklines that delivers up to 2.1 Bcf/d to Rockies Express Pipeline (“REX”), Texas Eastern Transmission, and others, the filings showed.
Energy Transfer Announces Sale of 32.44% Stake in Entity of Rover Pipeline Project to Blackstone Energy Partners for Approximately $1.57 Billion
DALLAS–July 31, 2017–(BUSINESS WIRE)–Energy Transfer Partners, L.P. (NYSE: ETP) today announced that its wholly owned subsidiaries, Energy Transfer Interstate Holdings, LLC (“ETIH”) and ET Rover Pipeline LLC (“HoldCo”), have signed an agreement with funds managed by Blackstone Energy Partners and Blackstone Capital Partners (“Blackstone”) whereby Blackstone will contribute approximately $1.57 billion in cash in exchange for a 49.9% interest in HoldCo. HoldCo owns a 65% interest in Rover Pipeline LLC. HoldCo and Rover Pipeline LLC are constructing the Rover Pipeline and will be the operator of the pipeline once in service.
Upon completion, the Rover Pipeline will be an approximately 700 mile pipeline designed to transport 3.25 billion cubic feet of natural gas per day from the Marcellus and Utica Shale production areas to markets across the United States as well as into Union Gas Dawn Hub in Ontario, Canada for redistribution back into the United States or into the Canadian market.
The Blackstone investment will reimburse ETP for its pro rata share of the construction costs incurred by ETP through the closing date in connection with the Rover Pipeline, specified amounts of future construction costs and certain additional payments to ETP. ETP plans to use the proceeds to pay down debt and help fund its current growth projects, thereby greatly reducing its equity issuances. The transaction is expected to close in the fourth quarter of 2017, subject to customary closing conditions.
Upon closing, HoldCo will be owned 50.1% by Energy Transfer and 49.9% by Blackstone.
Latham & Watkins LLP acted as legal counsel to ETP. Vinson & Elkins acted as legal counsel to Blackstone. Blackstone was advised by Intrepid Partners LLC and by Morgan Stanley & Co. LLC, who was also the sole provider of the committed debt financing.
Energy Transfer Partners, L.P. (NYSE: ETP) is a master limited partnership that owns and operates one of the largest and most diversified portfolios of energy assets in the United States. Strategically positioned in all of the major U.S. production basins, ETP owns and operates a geographically diverse portfolio of complementary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, natural gas liquids (NGL) and refined product transportation and terminalling assets; NGL fractionation; and various acquisition and marketing assets. ETP’s general partner is owned by Energy Transfer Equity, L.P. (NYSE: ETE).
Energy Transfer Equity, L.P. (NYSE:ETE) is a master limited partnership that owns the general partner and 100% of the incentive distribution rights (IDRs) of Energy Transfer Partners, L.P. (NYSE: ETP) and Sunoco LP (NYSE: SUN). ETE also owns Lake Charles LNG Company. On a consolidated basis, ETE’s family of companies owns and operates a diverse portfolio of natural gas, natural gas liquids, crude oil and refined products assets, as well as retail and wholesale motor fuel operations and LNG terminalling.
Rover Ownership Structure
Rover Pipeline LLC
Subsidiaries and Affiliations
Rover Pipeline LLC (“Rover”) is a limited liability company organized and existing under the Delaware Limited Liability Act. Rover is owned 65 percent by ET Rover Pipeline LLC (“ET-Rover”), a subsidiary of Energy Transfer Interstate Holdings, LLC, 20 percent by AEMidco Rover, LLC and 15 percent by AE-Midco Rover II, LLC. Rover does not, directly or indirectly, own or control an interest in any other person or organized group of persons engaged in the production, transportation, distribution or sale of natural gas, or in the construction or financing of such enterprises.
Energy Transfer Interstate Holdings, LLC, a Delaware limited liability company, owns 100% of the equity interest in ET-Rover, and Heritage ETC, L.P., a Delaware limited partnership, owns 100% of the equity ownership interests in Energy Transfer Interstate Holdings, LLC, and Energy Transfer Partners, L.P. (“ETP”) indirectly owns 100% of the equity interests in Heritage ETC, L.P. Energy Transfer Equity, L.P. (“ETE”) directly or indirectly owns (i) 30,841,069 common units of ETP (8.7%); (ii) 50,160,000 Class H units of ETP, (iii) a 0.7% general partner interest in ETP, through ETE’s ownership interest in Energy Transfer Partners GP, L.P.; and (iv) 100% of the Incentive Distribution Rights of ETP, through ETE’s ownership interest in Energy Transfer Partners GP, L.P. Kelcy L. Warren owns, directly or indirectly, 91,627,110 common units of ETE (17%).
American Energy – Midstream, LLC, an Oklahoma limited liability company, owns 100% of the equity ownership interests in AE-MidCo Rover, LLC and AE-MidCo Rover II, LLC. American Energy Midstream Holdings, LLC, a Delaware limited liability company, owns 100% of the equity ownership interests in American Energy – Midstream, LLC. EMG AE Midstream Holdings, LLC, a Delaware limited liability company owns 91.74% of the equity interests in American Energy Midstream Holdings, LLC. EMG AE Midstream Holdings, LLC is an affiliated investment vehicle of The Energy & Minerals Group, which is the management company for a series of specialized private equity funds focusing on investing across various facets of the global natural resource industry.
Source: 2015 FERC Application