ORGANIZATION AND FORMATION OF THE PARTNERSHIP | 6 Months Ended |
Jun. 30, 2014 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
ORGANIZATION AND FORMATION OF THE PARTNERSHIP | ' |
ORGANIZATION AND FORMATION OF THE PARTNERSHIP |
Organization |
Marlin Midstream Partners, LP (the “Partnership”) is a midstream energy company that offers (i) natural gas gathering, compression, dehydration, treating, processing, and hydrocarbon dew-point control and transportation services to producers, marketers and third-party pipeline companies, and (ii) crude oil transloading services to Associated Energy Services, LP (“AES”), an affiliate of the Partnership. |
The Partnership is a Delaware limited partnership, formed in April 2013 by NuDevco Partners, LLC and its affiliates (“NuDevco”). NuDevco, a sole member limited liability company formed on August 27, 2010 under the Texas Limited Liability Company Act (“TLLCA”), is an affiliate of Spark Energy Ventures, LLC (“SEV”), a sole member limited liability company formed on October 8, 2007 under the TLLCA. NuDevco and SEV are both wholly owned by W. Keith Maxwell III. SEV was the sole member of Marlin Midstream, LLC and its subsidiaries (“Marlin Midstream”), and Mr. Maxwell was the sole member of Marlin Logistics, LLC (“Marlin Logistics”) prior to the closing of the Partnership’s initial public offering of 6,875,000 common units representing a 38.6% limited partner interest in the Partnership on July 31, 2013 (“IPO”). Concurrently, with the closing of the IPO, the Partnership also executed a new credit facility. |
In connection with the closing of the IPO, SEV contributed all of its interest in Marlin Midstream to the Partnership, and Mr. Maxwell contributed all of his interest in Marlin Logistics to the Partnership, through a series of transfers of interest in entities all under the common control of Mr. Maxwell in exchange for wholly owned subsidiaries of NuDevco receiving common units and all of the Partnership’s subordinated units and incentive distribution rights. The contribution of entities to the Partnership is not considered a business combination accounted for under the purchase method because it was a transfer of assets and operations under common control and, accordingly, balances were transferred at their historical cost. The Partnership’s historical condensed combined financial statements prior to the IPO are prepared using Marlin Midstream’s and Marlin Logistics’ historical basis in the assets and liabilities, and include all revenues, costs, assets and liabilities attributed to these entities for the periods presented. The Partnership’s financial statements subsequent to the IPO are prepared on a consolidated basis. |
The Partnership’s general partner, Marlin Midstream GP, LLC manages the Partnership’s activities subject to the terms and conditions specified in the Partnership’s partnership agreement. The Partnership’s general partner is owned by NuDevco Midstream Development, LLC (“NuDevco Midstream Development”), an indirect wholly owned subsidiary of NuDevco. The operations of the general partner, in its capacity as general partner, are managed by its board of directors. Actions by the general partner that are made in its individual capacity will be made by NuDevco Midstream Development as the sole member of the Partnership’s general partner and not by the board of directors of the general partner. The partnership’s general partner will not be elected by the Partnership’s unitholders and will not be subject to re-election on a regular basis in the future. The officers of the general partner will manage the day-to-day affairs of the Partnership’s business. |
Marlin Midstream was formed November 26, 2002 as a sole member limited liability company under the TLLCA. Marlin Midstream is a midstream energy company offering the following midstream services: natural gas gathering, compression, dehydration, treating, processing and hydrocarbon dew-point control and transportation services to producers, third-party pipeline companies and marketers. |
Marlin Logistics, formerly known as FuelCo Energy, LLC, was formed August 26, 2010 as a sole member limited liability company under the TLLCA. Marlin Logistics is a crude oil logistics company that offers crude oil transloading services. |
This report contains information occurring prior to the completion of the IPO, and prior to the effective dates of certain of the agreements discussed herein. Consequently, the unaudited condensed consolidated and combined financial statements and related discussion of financial condition and results of operations contained in this report for those periods prior to the initial public offering pertain to the combined businesses and assets of Marlin Midstream, LLC and its subsidiaries and Marlin Logistics, LLC. |
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Unless the context otherwise requires, references in this report to “we,” “our,” “us,” or like terms, when used in a historical context, refer to the combined businesses and assets of Marlin Midstream, LLC and its subsidiaries and Marlin Logistics, LLC, and when used in the present tense or prospectively, refer to Marlin Midstream Partners, LP and its subsidiaries. |
As a company with less than $1.0 billion in revenues during its last fiscal year, the Partnership qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other regulatory requirements. |
Initial Public Offering of Marlin Midstream Partners, LP |
On July 31, 2013, the Partnership completed the IPO of 6,875,000 common units, representing a 38.6% limited partner interest, to the public for $20.00 per common unit, less an underwriting discount of $1.20 per common unit. After the closing of the IPO, substantially all the Partnership’s gross margin is generated under fee-based commercial agreements, the substantial majority of which have minimum volume commitments. |
Net proceeds to the Partnership from the IPO were $125.3 million, after underwriting discount, structuring fees and other direct IPO costs. Using those proceeds, the Partnership repaid its existing credit facility of approximately $121.9 million and the outstanding revolving credit facility of approximately $10.0 million, and settled its existing interest rate swap liability of approximately $0.1 million. |
At the consummation of the IPO, the amount of common, subordinated, and general partner units is summarized in the table below: |
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| | | |
| Number of units | Limited Partner |
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| at July 31, 2013 | Interest |
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Publicly held common units | 6,875,000 | | 38.60% |
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Common units held by NuDevco | 1,849,545 | | 10.40% |
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Subordinated units held by NuDevco | 8,724,545 | | 49.00% |
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General partner units | 356,104 | | 2.00% |
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Total | 17,805,194 | | 100.00% |
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Our Fee-Based Commercial Agreements |
Prior to the IPO, the Partnership generated revenues primarily under keep-whole and other commodity-based gathering and processing agreements with third parties and its affiliates. At the closing of the IPO, the Partnership terminated the existing commodity-based gas gathering and processing agreement with AES, assigned to AES all of the remaining keep-whole and other commodity-based gathering and processing agreements with third party customers and entered into a new three-year fee-based gathering and processing agreement with AES with a minimum volume commitment and annual inflation adjustments. |
Following the closing of the IPO, the Partnership has multiple fee-based commercial agreements in place with Anadarko Petroleum Corporation (“Anadarko”) and AES, substantially all of which include minimum volume commitments and annual inflation adjustments that are the source of a substantial portion of the Partnership’s revenues. |