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Exterran Partners’ Key Business Strategies

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Exterran’s three major growth strategies

Exterran Partners, L.P. (EXLP) aims to grow its business through the following three growth strategies: organic growth, dropdowns, and acquisitions.

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Organic growth

According to a company presentation, EXLP achieved organic growth of ~776,000 operating horsepower over the past year. The company noted in its recent earnings call that it saw 93,000 horsepower growth in the fourth quarter. Total organic growth for the year was ~260,000 horsepower.

Dropdowns

Exterran Holdings (EXH) could potentially drop down additional contract operation assets to EXLP. Additional dropdowns could help the business grow further.

EXLP is a subsidiary company of Exterran Holdings (EXH), which also holds EXLP’s general partners, and makes up ~0.11% of the Vanguard Energy ETF (VDE) and 0.12% of the iShares U.S. Energy ETF (IYE).

A company similar in structure to EXLP is Williams Partners (WPZ), an MLP that was formed after Access Midstream Partners merged with Williams. WPZ’s general partner is owned by Williams Companies Inc. (WMB).

Growth through acquisitions

Exterran has achieved significant growth in 2014 through two acquisitions. Both acquisitions were with Chesapeake Energy (CHK). According to a company presentation, EXLP saw growth through acquisitions of ~550,000 operating horsepower over the past year.

Growth through acquisitions also highlights EXLP’s efforts to not remain entirely dependent on EXH for its growth. In the previous part of this series, we looked at EXLP’s 2014 acquisitions in greater detail.

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