Southcross Energy Partners acquires South Texas Pipelines for approx. $40M Southcross Energy Partners, L.P. has acquired natural gas pipelines near Corpus Christi, Texas along with contracts related to those pipelines. The purchase price is approximately $40M in cash and funds for the acquisition were drawn from Southcross’ existing credit facility. The pipelines were acquired from Onyx Midstream, LP and Onyx Pipeline Company. The pipelines, which range from 12-inches to 24-inches in diameter, transport natural gas to two power plants in Nueces County, Texas under fixed-fee contracts that extend through 2029. Total length of the pipelines is approximately 50 miles. Natural gas volumes through the pipelines averaged 97 million cubic feet per day during 2013. The transaction is expected to be accretive to Southcross’ distributable cash flow during 2014.
Southcross Energy Partners repeats Q4 adjusted EBITDA view $20M- $24M Southcross Energy Partners expects near term de-leveraging and is targeting 3.0x-4.0x leverage ratio and 1.1x-1.2x distribution coverage with "prudent use of equity" to fund growth. Southcross expects to achieve at least 1.0x coverage of common units in 1Q15 and expects to grow distributions in 2015. The company says its gross operating margin is becoming increasingly fixed fee oriented and it anticipates the ability to grow adjusted EBITDA without significant growth capital. Southcross sees its commodity sensitive margins to decline as a portion of gross operating margin, noting that its recently acquired and new contracts are largely fixed fee margins. Guidance and comments from investor day slides disclosed in a regulatory filing.