Operations in all the right places, and growth through acquisitions and new projects pushed Access Midstream Partners LP to almost double its asset base last year.
Access Midstream came in at No. 5 on this year's Oklahoma Inc. ranking of the state's best-performing public companies, as tallied by S&P Capital IQ. That's up from No. 17 in 2012.
“We're in every major unconventional basin except the Bakken,” said CEO Mike Stice. “This is a significant footprint across the midstream sector. Our business model, which is what's delivering on those financial results, is to have no commodity price risk whatsoever. It's all fixed-fee, midstream services.”
The company has more than 1,350 employees across the country, including more than 600 people in Oklahoma City at two Central Park office blocks at Interstate 44 and North Lincoln Boulevard. Access Midstream remodeled the offices and now has a state-of-the-art pipeline control center in the basement of one of the buildings.
Access Midstream, which gathers, treats and processes natural gas and natural gas liquids, began as the pipeline division of Chesapeake Energy Corp. and later became a publicly traded spinoff called Chesapeake Midstream Partners LP.
The company changed its name to Access Midstream last year after being bought out by its initial backer, Houston-based private equity firm Global Infrastructure Partners LP.
Williams Cos. Inc. made a large investment in December about the same time Access Midstream acquired the rest of Chesapeake's midstream assets in in the Utica, Niobrara and Eagle Ford shale plays. Access Midstream spent much of 2013 integrating those assets, which also included expansions of its existing positions in the Mid-Continent, Haynesville and Marcellus areas.
“We became a much bigger company, as well as a completely independent company,” Stice said. “That led to an enormous amount of challenges that don't necessarily show up in the numbers. We called it our transition effort. We grew significantly in regard to organizational capability in order to do all those functions on our own.”
Chesapeake remains Access Midstream's largest customer, although Stice is working to lower that share as the partnership grows. Chesapeake was 80 percent of Access Midstream's business in December; that has since fallen to about 74 percent.
Other Access Midstream customers include Total SA, Statoil ASA, Anadarko Petroleum Corp., Mitsui & Co. Inc. and Royal Dutch Shell PLC.
Stice said Access Midstream delivers value to its unit holders by charging flat fees for its services, removing the risk from swings in commodity prices. By focusing on intrastate midstream gathering and processing services, the partnership also doesn't have to deal with federal energy regulators on interstate tariffs and rates.
“This has really been the home run for us with regard to our unit price uplift,” Stice said. “The market loves businesses that can predict what their cash flows are. We call it the best-in-class business model. It is so predictable that we can basically articulate to the Street how we're going to deliver and then just do it.”
Christopher Sighinolfi, an analyst at Jefferies who has a “buy” rating on Access Midstream's units, said he's impressed by the partnership's cash flow.
“Though many MLPs (master-limited partnerships) tout ‘fee-based' business models, few offer ACMP's contracted fee-for-service cash flow security and regional diversity,” Sighinolfi said in a recent research report.
Access Midstream also benefits from the expertise of its general partners, Global Infrastructure Partners and Williams. Stice said the partnership benefited from its early association with Chesapeake as that company was capturing acreage across the country.
Stice said Global Infrastructure Partners offers both financial backing and management consulting, which was helpful as the company integrated its acquisition of Chesapeake's remaining midstream assets.
Stice said he's particularly proud of Access Midstream's safety record, which he called the best among midstream companies. Safety regulators measure the number of recordable incidents for every 200,000 hours worked. So far this year, the partnership has a total recordable incident rate of 0.39, Stice said.
“The industry has not always been this safe,” Stice said. “I think in general it's getting safer across the board, but there's no doubt we stand out in the safety area as well.”