As part of the deal, American Midstream will acquire JP Energy in a unit-for-unit merger.

Meanwhile, private equity firm ArcLight Capital Partners, which holds stakes in both companies, will combine the general partners of American Midstream and JP Energy Partners.

American Midstream chairman, president and CEO Lynn Bourdon III said: “The merger elevates and reshapes our two businesses into a new platform that we expect will allow for higher growth, new business opportunities and a stronger financial position than either company could achieve separately.

“This transformational combination is the next logical step in expanding services from the wellhead to the end user market.”

American Midstream expects the merger to create a midstream business with assets in North American basins, including the Permian, Gulf of Mexico, Eagle Ford and Bakken.

ArcLight managing partner Dan Revers said: “Through the combination, ArcLight can concentrate its financial and strategic support and work even more closely with Lynn and his team to continue the growth of American Midstream.”

The combined partnership will own and operate more than 3,100 miles of gathering and transportation pipeline; over 2.5 billion cubic feet per day (bcf/d) of transportation capacity; six processing plants with 400 million cubic feet per day (mmcf/d) of processing capacity; and three fractionation facilities.

It will also own 13.9% stake in offshore floating production facility (FPS) in the deep-water Gulf of Mexico; over 6 million barrels of above-ground liquids storage capacity, and a wholesale propane business in the US.

In addition to increasing scale and diversification, the merger is expected to accelerate growth, add complementary assets and improve financial position of the combined entity.

Planned to be completed in late 2016 or early 2017, the transaction is subject to customary closing conditions, approval by JP Energy public unitholders and regulatory approvals. 

Image: American Midstream signs agreement to expand its midstream business in the US. Photo: courtesy of supakitmod/