American Midstream Partners purchased Costar Midstream from Dallas-based Energy Spectrum Partners VI and Costar management for $470 million Thursday.
Costar, also based in Dallas, is an onshore gathering and processing company.
Costar’s primary assets are in East Texas and the Permian basin.
It also has a “significant” crude oil gathering system project underway in the Bakken oil play.
The deal includes Costar’s 55 million cubic feet per day Longview natural gas gathering and processing facility in Gregg County, Texas and a 400 acre rail facility adjacent to Longview that is currently under development.
The rail facility is expected to be operational in the second half of 2015.
Midstream is also acquiring the 40 million cubic feet per day Yellow Rose gas gathering and cryogenic processing system in the Permian Basin, an off-spec condensate treating plant currently under construction in the Permian and a Bakken oil gathering system that is also under construction.
The Bakken project will have an operating capacity in excess of 40,000 barrels per day with a downstream connection to the Tesoro Logistics pipeline and the ability to accept volumes via truck.
The project is expected to begin initial operations in the fourth quarter of 2014 or the first quarter of 2015.
The acquisition was funded with 6.9 million American Midstream common units issued directly to Energy Spectrum and Costar senior management and $272 million in cash.
The deal closed October 14, 2014.
American Midstream, based in Delaware, expects to invest $70 million to $80 million over the next 12 to 18 months to complete the Bakken, Longview rail and Permian off-spec condensate blending development projects.
Costar’s senior management team will join American Midstream.