Joint Venture: Ares’ Salt Creek strikes agreement with Apache ($APA)


[Context: On May 14, Ares- and ARM Energy-backed Salt Creek Midstream announced a midstream agreement with a subsidiary of Apache (NYSE: APA) to construct an Alpine High crude oil pipeline and give Apache the option to buy 50% of the $100m project. Further details, advisors and related links are below.]

Salt Creek Midstream Ares Management

Apache Midstream and ARM Energy Holdings Announce Development of Salt Creek Midstream’s SCM Alpine, LLC

Apache Midstream Signs Option for 50% Stake in 445,000 Bbl/d NGL Header System; ARM to Construct, Manage, Operate and Own an Interest in the Transportation System; Salt Creek Midstream and SCM Alpine Backed by Ares Management’s Private Equity Group

HOUSTON–May 14, 2018–(BUSINESS WIRE)–Apache Midstream (“Apache”), a subsidiary of Apache Corporation (NYSE, NASDAQ: APA) and ARM Energy Holdings (“ARM Energy”) today announced that ARM Energy’s affiliate, Salt Creek Midstream, LLC (“Salt Creek”) is developing SCM Alpine, LLC (“Alpine”), a 445,000 Bbl/d capacity natural gas liquids (NGL) header system, and that Apache Midstream has signed an option to acquire a 50% stake in Alpine.

Construction has commenced, and the project is expected to be operational in Q1 2019. ARM Midstream Management, LLC, an affiliate of ARM Energy, will construct, manage and operate the system. The $100 million project is supported by 10-year commitments from both Salt Creek and Apache Corporation. The term of the commitments may be automatically extended twice for an additional five years for a potential term of 20 years.

The Alpine header system will be comprised of two pipeline segments that originate at both the Salt Creek and Apache processing facilities in southern Reeves County, Texas. The pipeline will provide flexibility by transporting the NGLs to Waha, where it will have the ability to interconnect to downstream pipelines providing access to Mont Belvieu and Corpus Christi fractionation facilities.

ARM Energy’s CEO Zach Lee said, “We are pleased to join Apache in announcing this project. This announcement signifies Salt Creek’s extensive relationships in the Delaware Basin and our expanding world-class asset-base. We have a deep understanding of the fundamentals driving upstream and midstream economics and their impact on the gulf coast downstream markets. We believe Alpine is well-positioned to provide market optionality leading to netback advantages for its customer base.”

Apache Corporation’s Senior Vice President, Midstream and Marketing, Brian Freed, said, “The development of this NGL project is another significant step in Apache’s Alpine High infrastructure buildout. This project provides Apache access to the emerging Waha market area, increasing the company’s long-term operational flexibility and market optionality.”

In April 2018, ARM Energy announced a strategic partnership with Ares Management, L.P. (“Ares”) to develop Salt Creek in the Delaware Basin. Salt Creek and Alpine are both owned by funds managed by the Ares Private Equity Group and ARM Energy.

Locke Lorde LLP provided legal representation to ARM Energy/Salt Creek and Bracewell LLC represented Apache.

About Salt Creek Midstream, LLC

Formed in 2017, Houston-headquartered Salt Creek Midstream, LLC is a joint venture of ARM Energy Holdings LLC and funds managed by Ares Management, L.P. Salt Creek is a full service midstream provider, offering gas and crude gathering, compression, cryogenic processing and treating services. The greenfield development project spans more than 250,000 acres across Culberson, Reeves, Ward, Winkler, Lea, Pecos, and Eddy Counties within the Delaware Basin.

About Apache

Apache Corporation is an oil and gas exploration and production company with operations in the United States, Egypt and the United Kingdom.

About ARM Energy Holdings, LLC

Headquartered in Houston, with offices in Calgary, Denver, Midland, and Pittsburgh, ARM Energy is a premier producer services firm, active in every sector of the energy value chain across all major North American oil and gas basins. Its integrated, diversified portfolio includes Asset Risk Management, LLC, providing risk management and hedging strategies for producers; ARM Energy Management LLC, providing physical oil and gas marketing, transportation and asset management services and trading; and ARM Midstream, LLC, providing midstream investment, infrastructure development and operations. .

About Ares Management, L.P.

Ares Management, L.P. is a publicly traded, leading global alternative asset manager with approximately $112.5 billion of assets under management as of March 31, 2018 and 18 offices in the United States, Europe, Asia and Australia. Since its inception in 1997, Ares has adhered to a disciplined investment philosophy that focuses on delivering strong risk-adjusted investment returns throughout market cycles. Ares believes each of its three distinct but complementary investment groups in Credit, Private Equity and Real Estate is a market leader based on assets under management and investment performance. Ares was built upon the fundamental principle that each group benefits from being part of the greater whole.

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