Azure Completes $910 Million Acquisition Of TGGT Midstream

Acquired 100% of the equity interest in TGGT Holdings LLC.

Azure Midstream Holdings LLC completed its acquisition from EXCO Resources Inc. and BG Group Plc of 100% of the equity interest in TGGT Holdings LLC for $910 million, the company announced Nov. 18.

The effective date of the acquisition is Nov. 15. As part of this transaction, Energy Spectrum Partners VI LP, a group of co-investors affiliated with Energy Spectrum and an affiliate of Tenaska Capital Management LLC, contributed cash for an ownership stake in Azure. In a related transaction, the East Texas Gathering System, an asset managed by Tenaska Capital, is being contributed for an additional ownership interest. As partial consideration to the transaction, EXCO and BG will collectively own 7% of Azure.

With the combination of TGGT and ETG, the Houston-based Azure will operate more than 1,300 miles of gathering pipelines that move natural gas from North Louisiana and East Texas supply basins to 20 or more existing major intrastate and interstate pipelines in the region. The pipelines have a combined delivery capacity of 4 billion cubic feet per day (Bcf/d) including 2.7 Bcf/d of treating capacity. The systems are currently gathering and delivering 1.3 Bcf/d.

"Azure is very pleased to complete this agreement to acquire TGGT and we appreciate the continued support of Energy Spectrum as our third-time sponsor and J.P. Morgan as the debt arranger for this transaction," I.J. "Chip" Berthelot, Azure president, said in the release. "We have been working on this project for in excess of a year, and we believe that Doug Miller and the entire EXCO and BG team have been great to work with. We also look forward to their continued participation as partners in our business."

"We also welcome the addition of Tenaska Capital as a major sponsor and are excited about the potential synergies of combining their ETG assets with the TGGT assets," Berthelot said. "It has also been a pleasure working with the TGGT and Tenaska personnel in both Dallas and in the field, and I look forward to building on these relationships in the future. Finally, I want to recognize our entire Azure Midstream team for their tireless efforts in getting this acquisition across the finish line."

"Energy Spectrum is very excited to work with Chip Berthelot and his team in forming our third company together, and we are also pleased to work with Tenaska Capital again for the second time," Jim Benson, managing partner of Energy Spectrum, said in the release. "Energy Spectrum is also extremely appreciative of many of our limited partners who have co-invested in Azure to round out the equity group, and we all look forward to building a sizable gas gathering and processing business with the Azure team."

"We are very pleased to partner with Chip Berthelot, one of the most successful midstream entrepreneurs, the Azure team and Energy Spectrum to begin the process of consolidation in the Haynesville shale. This combination will give the producers on our ETG system, as well as those on the TGGT system, more market options for their gas, as well as potential for on-system processing as we complete our Fairway Processing Plant. I would like to thank our employees for working with Azure on this terrific combination," John O'Shea, managing director of Tenaska Capital, said in the release.