Shell dedicates approximately 100,000 acres in
Loving, Reeves and Ward counties, Texas to Crestwood under a
long-term gas gathering agreement
Joint venture with First Reserve to finance the
gathering system and pursue other growth opportunities in the
Delaware Basin
Crestwood Equity Partners LP (NYSE: CEQP) (“Crestwood”)
announced today that it has entered into a long-term agreement with
SWEPI LP (“SWEPI”), a subsidiary of Royal Dutch Shell plc, to
construct, own and operate a natural gas gathering system in
Shell’s operated position in the Permian - Delaware Basin. The
system will be owned through Crestwood’s previously announced joint
venture with First Reserve, Crestwood’s indirect general partner
and largest unitholder, which was formed to finance and own
midstream infrastructure in the Delaware Basin. Crestwood estimates
the full build-out of the gas gathering system will cost
approximately $180 million. Project development activities are
underway with a targeted initial in-service date on or before July
1, 2017.
SWEPI will provide Crestwood with a dedication of approximately
100,000 acres and gathering rights for SWEPI gas production across
a large acreage position in Loving, Reeves and Ward counties,
Texas. The initial gathering system is designed for gas production
of approximately 250 million cubic feet per day and will include
194 miles of low pressure gathering lines, 36 miles of high
pressure trunklines, and centralized compression facilities which
are expandable over time as production increases. Crestwood will
provide gathering, dehydration, compression and liquids handling
services on a fixed fee basis. Additionally, Shell has the option
to purchase up to a 50 percent equity interest in the system prior
to September 1, 2017.
Robert G. Phillips, Chairman, President and Chief Executive
Officer of Crestwood’s general partner, stated, “We are pleased to
enter into this important, long-term gathering agreement with SWEPI
in the prolific Permian Basin where Shell has been developing its
premier Delaware Basin acreage position since 2012. This agreement
demonstrates Crestwood’s strong operating track record in the
Marcellus, Bakken, Barnett and Delaware basins and our leading
commitment to customer service, safe and reliable operations and
environmental stewardship.”
Mr. Phillips continued, “Importantly, the Delaware Basin joint
venture with First Reserve will provide Crestwood with additional
financial flexibility to invest in this great long-term growth
project while maintaining a disciplined balance sheet and strong
distribution coverage. With the financial structure from our joint
venture and the targeted in-service date for the new natural gas
gathering system, we expect the investment will be accretive to
Crestwood as early as late 2017 and, in any event, fully accretive
to Crestwood in 2018. Additionally, with First Reserve’s support
and incremental capital commitment to the joint venture, Crestwood
is very well positioned financially to execute on the SWEPI
opportunity and other midstream opportunities in the Delaware
Basin, including the previously announced 3-stream gathering system
in Reeves, Loving, & Culberson counties, Texas which remains
under exclusivity with an anchor shipper.”
First Reserve Joint Venture
First Reserve, a leading global private equity and
infrastructure investment firm exclusively focused on energy, and
Crestwood have previously announced the formation of a joint
venture to finance and own midstream projects in the Delaware
Basin. Under the terms of the joint venture, which will be owned
50% by Crestwood and 50% by First Reserve, First Reserve will fund
100% of the initial capital requirements during the early-stage
build-out of the gathering system, after which Crestwood will fund
100% of capital requirements until such time as both parties have
funded an equal amount of capital. Additionally, Crestwood and
First Reserve will make an initial pledge up to a combined $500
million for the joint venture to pursue incremental midstream
infrastructure growth opportunities in the Delaware Basin,
including the previously announced 3-stream gathering system
currently under exclusivity with an anchor shipper. Crestwood will
fund its portion of capital with internally generated cash flow and
borrowings under its revolving credit facility.
Gary Reaves, Managing Director of First Reserve, stated, “First
Reserve is pleased to partner with Crestwood to develop a premier
gas gathering system in the core of the Delaware Basin. The joint
venture with Crestwood serves as a strong platform for Crestwood
and First Reserve to pursue incremental opportunities in the
Delaware Basin which, in our view, is currently the most attractive
onshore resource play in the United States. As general partner of
Crestwood, we remain highly committed to the success of Crestwood
and view the opportunity as recognition of Crestwood’s ability to
capture greenfield projects and operate as an industry leading
midstream provider of gathering services.”
Forward-Looking Statements
This news release contains forward-looking statements within the
meaning of the U.S. Private Securities Litigation Reform Act of
1995 and Section 21E of the Securities and Exchange Act of 1934.
The words “expects,” “believes,” anticipates,” “plans,” “will,”
“shall,” “estimates,” and similar expressions identify
forward-looking statements, which are generally not historical in
nature. Forward-looking statements are subject to risks and
uncertainties and are based on the beliefs and assumptions of
management, based on information currently available to them.
Although Crestwood believes that these forward-looking statements
are based on reasonable assumptions, it can give no assurance that
any such forward-looking statements will materialize. Important
factors that could cause actual results to differ materially from
those expressed in or implied from these forward-looking statements
include the risks and uncertainties described in Crestwood’s
reports filed with the Securities and Exchange Commission,
including its Annual Report on Form 10-K and its subsequent
reports, which are available through the SEC’s EDGAR system at
www.sec.gov and on our website. Readers are cautioned not to place
undue reliance on forward-looking statements, which reflect
management’s view only as of the date made, and Crestwood assumes
no obligation to update these forward-looking statements.
About Crestwood Equity Partners LP
Houston, Texas, based Crestwood Equity Partners LP (NYSE: CEQP)
is a master limited partnership that owns and operates midstream
businesses in multiple unconventional shale resource plays across
the United States. Crestwood Equity is engaged in the gathering,
processing, treating, compression, storage and transportation of
natural gas; storage, transportation, terminalling, and marketing
of NGLs; and gathering, storage, terminalling and marketing of
crude oil.
About First Reserve
First Reserve is a leading global private equity and
infrastructure investment firm exclusively focused on energy. With
over 30 years of industry insight, investment expertise and
operational excellence, the Firm has cultivated an enduring network
of global relationships and raised approximately USD $31 billion of
aggregate capital since inception. Putting these to work, First
Reserve has completed more than 575 transactions (including
platform investments and add-on acquisitions) on six continents.
Its portfolio companies span the energy spectrum from upstream oil
and gas to midstream and downstream, including resources, equipment
and services and infrastructure. Visit us at www.firstreserve.com
for more information.
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Crestwood Equity Partners LPInvestor ContactJosh
Wannarka, 713-380-3081Vice President, Investor
Relationsjosh.wannarka@crestwoodlp.com
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