LP Gas

American Midstream to sell Pinnacle Propane locations

American Midstream Partners entered into an agreement to sell its propane marketing and services business unit, including Pinnacle Propane, to SHV Energy N.V., an LP gas distributor that operates in 20 countries.

Through the transaction, American Midstream will divest 100 percent of its propane business unit to SHV Energy, including Pinnacle Propane’s 40 service locations; Pinnacle Propane Express’ cylinder exchange business and related logistic assets; and the Alliant Gas utility system. The company plans to sell these assets for $170 million in cash and aims to complete the transaction by the third quarter of 2017, American Midstream says.

American Midstream chose to sell these assets in order to pursue its growth objectives. In the second quarter of 2017, American Midstream began executing on a capital optimization strategy to simplify its businesses and redeploy capital from non-core assets toward complementary opportunities in the partnership’s Gulf of Mexico, Permian Basin and East Texas assets.

The partnership expects all proceeds from the propane sale to be reallocated within the third quarter of 2017, including the partnership’s June 2017 acquisition of the Viosca Knoll system from Genesis Energy for $32 million. Viosca Knoll serves producing fields in Main Pass, Mississippi, including American Midstream’s High Point and Destin pipelines. That acquisition will help American Midstream to develop a Gulf of Mexico system that offers strong interconnectivity across the Gulf Coast, the company adds.

“Over the past few months, [American Midstream’s] management team has communicated its strategy to strengthen the partnership’s competitive position in our core areas, evaluate non-core asset sales and reallocate capital to areas with the greatest long-term value,” says Lynn Bourdon, the partnership’s CEO. “The sale of the propane business and acquisition of Viosca Knoll are the first steps in implementing a strategy that achieves these goals.”