Business Context and Reporting Period
This Form 8-K was filed by Plains GP Holdings, L.P. on February 14, 2017, reporting the completion of a material asset acquisition. The transaction involves the acquisition of Alpha Holding Company, LLC, which owns the FERC-regulated "Alpha Crude Connector" crude oil gathering system located in New Mexico and Texas.
Key Financial Metrics
- Total Consideration: Approximately $1.216 billion in cash.
- Deposit Paid: $40 million (paid upon signing).
- Adjustments: The final consideration is subject to working capital adjustments as of January 1, 2017, and other routine adjustments.
- Asset Capacity: The acquired system includes 515 miles of gathering and transmission lines with a target capacity of approximately 350,000 barrels per day following planned enhancements.
Material Changes
On February 14, 2017, Plains Pipeline, L.P. assigned its rights to the acquisition agreements to its wholly-owned subsidiary, Plains ACC Holdings LLC, and consummated the purchase. This transaction adds a significant crude oil gathering system to the company's portfolio, including five market interconnects and acreage dedications covering approximately 315,000 gross acres, primarily with 10-year terms.
Outlook and Management Commentary
Management intends to make three additional interconnects to the existing Northern Delaware Basin system and implement enhancements to increase system capacity. The acquisition secures acreage dedications from major producers, including Concho Resources Inc. The filing does not provide specific revenue guidance, profit margins, or liquidity metrics for the reporting period, as this is a transactional report rather than a periodic financial statement.
Investor Verification Checklist
- Verify the final purchase price after working capital and routine adjustments are calculated.
- Confirm the timeline and capital expenditure required for the planned interconnects and capacity enhancements.
- Review the specific terms of the acreage dedications, particularly the 10-year terms with Concho Resources Inc.
- Assess the impact of the $1.216 billion cash outflow on the company's overall liquidity and debt covenants.