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| ACMP > SEC Filings for ACMP > Form 8-K on 26-Dec-2012 | All Recent SEC Filings |
26-Dec-2012
Entry into a Material Definitive Agreement, Completion of Acquisitio
Introductory Note
On December 20, 2012, Access Midstream Partners, L.P. (the "Partnership" or "we") completed our previously announced acquisition of Chesapeake Midstream Operating, L.L.C. ("CMO") from Chesapeake Midstream Development, L.L.C. ("CMD"), a Delaware limited liability company and wholly owned subsidiary of Chesapeake Energy Corporation. CMO, together with its subsidiaries, owns certain midstream gas gathering, processing and related assets in the Eagle Ford, Utica, Niobrara, Haynesville and Marcellus basins. We refer to this transaction as the "CMO Acquisition."
Gas Gathering Agreements
On December 20, 2012, in connection with the closing of the CMO Acquisition, we entered into new gas gathering agreements (the "Gas Gathering Agreements") with certain subsidiaries of Chesapeake Energy Corporation (such subsidiaries collectively, "Chesapeake"). For the avoidance of doubt, the joint ventures in the Utica region that we acquired in connection with the CMO Acquisition and that are described below did not enter into new gas gathering agreements. Each Gas Gathering Agreement defines the services, fees and obligations of the parties with respect to a particular oil and natural gas geologic formation or producing region of the United States. The terms of each region are:
Eagle Ford:
• Gathering, Compression, Dehydration and Treating Services. We will gather, compress, dehydrate and treat natural gas for Chesapeake within the Eagle Ford region in exchange for a cost-of-service based fee for natural gas gathered and treated on our gathering systems. The cost-of-service components will include compression expense, deemed general and administrative expense, capital expenditures, fixed and variable operating expenses and other metrics. We refer to these fees collectively as the Eagle Ford fee.
• Acreage Dedication. Pursuant to the applicable Gas Gathering Agreement, subject to certain exceptions, Chesapeake has agreed to dedicate all of the natural gas owned or controlled by it and produced from or attributable to existing and future wells located on natural gas and oil leases covering lands within an acreage dedication in the Eagle Ford region. Chesapeake's dedication of the natural gas produced from applicable dedicated properties will run with the land in order to bind successors to Chesapeake's interest, as well as any natural gas interests in the dedicated properties subsequently acquired by Chesapeake.
• Fee Redetermination. During 2013 and 2014, the Eagle Ford fee is determined by a fee tiering mechanism that calculates the Eagle Ford fee on a monthly basis according to the quantity of gas delivered to us by Chesapeake relative to its scheduled deliveries. Effective on January 1, 2015 and January 1st of each year thereafter for a period of 20 years from July 1, 2012, the Eagle Ford fee will be redetermined based on a cost-of-service calculation that provides a specified pre-income tax rate of return on invested capital.
• Well Connection Requirement. Subject to required notice by Chesapeake, we will have the option to connect new operated wells within our Eagle Ford region acreage dedications as requested by Chesapeake. If we elect not to connect a new operated well, Chesapeake will be provided alternative forms of release. Subject to certain conditions specified in the applicable Gas Gathering Agreement, if we elect to connect a new well to our gathering systems, we are generally required to connect the new wells within specified timelines subject to penalties for delayed connections, up to a specified cap. If the well is delayed for more than one year, then the well pad may be released from Chesapeake's acreage dedication at Chesapeake's option.
Utica:
• Gathering, Compression, Dehydration, Processing and Fractionation Services. We will gather, compress and dehydrate natural gas in exchange for a cost-of-service based fee for natural gas gathered on our gathering systems. The cost-of-service components (i) for our 66% operating interest in a joint venture which owns five wet gas gathering systems (the "Cardinal JV"), and (ii) in the area covered by our 100% ownership interest in four dry gas gathering systems (the "Utica Dry") will include compression expense (in the case of the Utica Dry only), deemed general and administrative expense, capital expenditures, fixed and variable operating expenses and other metrics. We also will process and fractionate natural gas through our 59% non-operating interest in a joint venture that is currently constructing three 200 million cubic feet per day processing plants, a 90,000 barrel per day fractionation facility, approximately 870,000 barrels of NGL storage capacity and other ancillary assets (the "UEO . . .
On December 20, 2012, we completed our previously announced acquisition of CMO from CMD.
The aggregate consideration we paid to CMD was approximately $2.16 billion, subject to post-closing adjustments. The purchase price was funded with proceeds from the issuance of senior notes, the issuance of common units and the proceeds from the sale of our Class B Units and Class C Units described in Item 3.02 of this Current Report on Form 8-K.
On December 20, 2012, we sold (i) 5,929,025 Class B Units to each of Williams and Hawk Holdings and (ii) 5,599,634 Class C Units to each of Williams and Hawk Holdings, in each case pursuant to that certain Subscription Agreement described and included in our Current Report on Form 8-K filed December 12, 2012. We received aggregate proceeds of approximately $700 million in exchange for the sale of the Class B Units and the Class C Units, inclusive of the capital contribution made by the General Partner to maintain its 2% interest in the Partnership. The Class B Units and Class C Units were issued in reliance upon an exemption from the registration requirements under the Securities Act of 1933, as amended, pursuant to Section 4(2) thereof.
To the extent required by Item 3.02 of Form 8-K, the information contained or incorporated in Items 1.01 and 5.03 of this Form 8-K relating to the issuance of our Class B Units and Class C Units is incorporated by reference in this Item 3.02. The description of our Class B Units, Class C Units and the Subscription Agreement can be found in our Current Report on Form 8-K filed December 12, 2012 and is incorporated in this Item 3.02 by reference.
The foregoing discussion is qualified in its entirety by reference to the full text of the Partnership Agreement Amendment (as defined below), which provides the terms and provisions of the Class B Units and Class C Units and is filed as Exhibit 3.1 to this Current Report on Form 8-K and incorporated into this Item 3.02 by reference.
Amendment No. 2 to the First Amended and Restated Agreement of Limited Partnership of Access Midstream Partners, L.P.
On December 20, 2012, in connection with the issuance of the Class B units and Class C Units, the General Partner executed an amendment (the "Amendment") to the First Amended and Restated Agreement of Limited Partnership of the Partnership (the "Partnership Agreement"). The Amendment provides for the establishment of the Class B Units and the Class C Units and amends and restates certain sections of the Partnership Agreement regarding the allocation of income, gain, loss and deductions and the distribution of available cash from operating surplus. A description of the Partnership Agreement is contained in the section entitled "The Partnership Agreement" of our Registration Statement filed on Form S-3 on December 12, 2012 and is incorporated herein by reference.
The foregoing description and the description contained in our Registration Statement filed on Form S-3 on December 12, 2012 is qualified in its entirety by reference to the full text of the Partnership Agreement Amendment, which is filed as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated into this Item 5.03 by reference.
(d) Exhibits
3.1 Amendment No. 2 to the First Amended and Restated Agreement of Limited Partnership of Access Midstream Partners, L.P. dated as of December 20, 2012.
4.1 Amended and Restated Registration Rights Agreement dated as of December 20, 2012, by and among Access Midstream Partners, L.P., GIP-A Holding (CHK), L.P., GIP-B Holding (CHK), L.P., GIP-C Holding (CHK), L.P., GIP II Eagle Holdings Partnership, L.P., GIP II Hawk Holdings Partnership, L.P. and The Williams Companies, Inc.
10.2 Second Letter Amendment Agreement, dated as of December 20, 2012, amending that certain Letter Agreement, dated as of June 15, 2012, by and among Chesapeake Energy Corporation, Chesapeake Midstream Management, L.L.C., Chesapeake Operating, Inc., Access Midstream GP, L.L.C. (f/k/a Chesapeake Midstream GP, L.L.C.), Access Midstream Partners, L.P. (f/k/a Chesapeake Midstream Partners, L.P.), Access MLP Operating L.L.C (f/k/a Chesapeake MLP Operating L.L.C.), GIP-A Holding (CHK), L.P., GIP-B Holding (CHK), L.P. and GIP-C Holding (CHK), L.P.
10.3 Termination Agreement, dated as of December 20, 2012, by and among Chesapeake Midstream Development, L.L.C. (successor to Chesapeake Midstream Holdings, L.L.C.), Access Midstream Ventures, L.L.C. (f/k/a Chesapeake Midstream Ventures, L.L.C.), Access Midstream Partners, L.P. (f/k/a Chesapeake Midstream Partners, L.P.), Chesapeake Energy Marketing, Inc., Chesapeake Exploration L.L.C., Chesapeake Louisiana L.P., Appalachia Midstream Services, L.L.C., Chesapeake Appalachia, L.L.C., Magnolia Midstream Gas Services, L.L.C., Access MLP Operating, L.L.C. (f/k/a Chesapeake Midstream Partners, L.L.C.), and Empress, L.L.C.
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