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An overview of Magnetar Capital's 3Q14 positions

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Part 9
An overview of Magnetar Capital's 3Q14 positions PART 9 OF 11

Magnetar adds to its stakes in Exterran Holdings

Magnetar Capital and Exterran Holdings

Magnetar Capital added new positions in Alibaba Group (BABA), TransCanada Corp. (TRP), and Encana Corp. (ECA). The fund’s top exits were Covidien Plc (COV), Lamar Advertising (LAMR), and Yahoo (YHOO). The fund added to its stakes in Shire Plc (SHPG), Exterran Holdings (EXH), and Teekay Corp. (TK). Its top stake decreases were in Williams Companies (WMB), Mallinckrodt Plc. (MNK), and American Airlines (AAL).

Magnetar increased its position in EXH in the third quarter. The position accounts for 5.01% of the fund’s total portfolio in the third quarter.

Magnetar adds to its stakes in Exterran Holdings

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About Exterran Holdings

EXH is a global leader in full-service natural gas compression. It’s a premier provider of services and equipment for oil and gas production, processing, treating, transportation, and storage. The company has 10,000 employees working in more than 30 countries. It covers every major hydrocarbon region in the world. It serves a full spectrum of energy clients—including major multinational oil producers, independent exploration companies, and production and distribution companies.

EXH owns an equity interest in Exterran Partners (EXLP). EXLP provides natural gas contract operation services to clients throughout the US.

Gross margin increases

Revenue was $723.8 million for 3Q14—compared to $775.6 million for 3Q13.

The fabrication backlog was $839.9 million as of September 30, 2014—compared to $619.4 million as of September 30, 2013. Fabrication bookings were $334.2 million for 3Q14—compared to $276.2 million for 3Q13.

EXH’s CEO, Brad Childers, added that “In the third quarter 2014, we achieved growth in operating horsepower in our North America contract operations business driven by our recent acquisition of compression assets from MidCon Compression, L.L.C. and another strong quarter of organic growth primarily in the shale and liquids rich basins. In addition, we achieved a 20% gross margin in our fabrication business, which had another solid quarter of bookings including natural gas processing projects in the United States, we are optimistic about the outlook for the fourth quarter 2014, although the recent decline in oil prices may have an impact on future industry activity levels.”

On August 8,2014, EXH completed its acquisition of natural gas compression assets from MidCon Compression, LLC—a subsidiary of Chesapeake Energy Corporation (CHK)—for ~$135 million.

EXH plans to separate its international and fabrication businesses

EXH plans to separate its international contract operations, international aftermarket services, and global fabrication businesses into a standalone, publicly-traded company—SpinCo. As a result, there will be two independent companies.

After completing the transaction, EXH—RemainCo—will be a pure-play US compression services business. It will own and operate the remaining US contract operations and US aftermarket services businesses—currently owned by EXH. EXLP’s operations won’t be affected by the transaction.

SpinCo’s businesses will include EXH’s current international contract operations and aftermarket services businesses. The operations are in Latin America and parts of the Eastern Hemisphere. It will also include the global fabrication business.

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