Crestwood will contribute its Willow Lake
gathering and processing assets to the Permian joint venture
between Crestwood and First Reserve
The joint venture will finance and build a new
200 MMcf/d cryogenic gas processing plant near Orla, TX and related
infrastructure
Creates large-scale integrated midstream
footprint covering the core of the Delaware Basin
Crestwood Equity Partners LP (NYSE:CEQP) (“Crestwood Equity” or
“Crestwood”) and First Reserve today announced that Crestwood
Permian Basin Holdings LLC (“CPJV”), a joint venture focused on
developing, owning and operating midstream infrastructure in the
Delaware Basin, has agreed to acquire Crestwood’s Willow Lake
gathering and processing assets located in Eddy County, New Mexico.
Crestwood and First Reserve, a leading global private equity and
infrastructure investment firm exclusively focused on energy, also
announced that the joint venture has fully sanctioned the
construction of a 200 million cubic feet per day (“MMcf/d”)
cryogenic gas processing plant located near Orla, TX (the “Orla
Plant”) and related infrastructure required to connect the Willow
Lake system to the plant (the “Orla Express Pipeline”) and multiple
third-party pipelines. Upon completion of the project the joint
venture’s integrated gathering and processing footprint will span
more than 100 miles and service customers across Eddy and Lea
counties, NM and Loving, Ward, Reeves and Culberson counties,
TX.
Management Commentary
“The announced Orla processing plant and the contribution of
Willow Lake to our Permian joint venture with First Reserve is an
important step in Crestwood’s strategy of expanding and integrating
our Delaware Basin footprint to create a super system that spans
over two million acres located in the heart of the most active
development counties in the Delaware Basin,” stated Robert G.
Phillips, Chairman, President and Chief Executive Officer of
Crestwood’s general partner. Mr. Phillips added, “Dropping the
Willow Lake assets into our joint venture is consistent with our
strategy of prudently pursuing organic growth opportunities while
managing risk and maintaining balance sheet strength. As we
continue to build out a large integrated platform in the Delaware
Basin, Crestwood and First Reserve are aggressively evaluating new
organic expansion opportunities for existing and new customers that
will further expand our Permian presence and drive meaningful cash
flow growth beginning in 2018.”
Gary Reaves, Managing Director of First Reserve, stated, “First
Reserve is excited to expand the size and scale of our Permian
joint venture with Crestwood. This project, which expands the scope
and adds processing capabilities to our joint venture, creates a
Delaware Basin infrastructure footprint that we believe is ideally
positioned to provide superior netbacks to our customers. It also
will allow us to capitalize on incremental organic growth
opportunities over the next 12 months 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 long-term success of Crestwood and we
believe the joint venture is well-positioned to generate accretive
growth in the Delaware Basin that will generate substantial value
for all of Crestwood’s stakeholders.”
Orla Expansion Project
The initial project scope will include the Orla Express
Pipeline, a 33 mile, 20 inch high pressure line connecting the
existing Willow Lake gathering system in Eddy County, NM to the
Orla plant. The Orla plant will offer full liquids handling and
multiple residue and NGL interconnects. Initial project capital is
expected to be approximately $170 million with an in-service date
in the second half of 2018.
The Orla Plant is supported by current dedications from existing
Willow Lake customers, including Concho Resources Inc., Mewbourne
Oil Company, Matador Resources Company, Cimarex Energy, Marathon
Oil Corporation, and Exxon Mobil Corporation and is strategically
located to attract processing volumes in Eddy County, NM as well as
around the Orla Express Pipeline and Nautilus system, a new gas
gathering system for a subsidiary of Royal Dutch Shell (SWEPI) in
Loving and Ward counties, Texas. The Orla Plant will provide needed
incremental processing capacity and enhanced netbacks to producers
through improved connectivity to the best NGL and residue gas
takeaway options out of the basin.
Willow Lake Assets Contributed to CPJV
Under the terms of the transaction, the joint venture will
continue to 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 Orla expansion, after which
Crestwood will fund 100% of capital requirements until both parties
have made an equal amount of capital contributions. In connection
with the expansion, Crestwood will contribute its Willow Lake
gathering and processing assets to the joint venture at a value of
$151 million, and this value will be credited as part of
Crestwood’s capital requirements to the joint venture. Capital
requirements thereafter are expected to be funded 50/50 by
Crestwood and First Reserve. Crestwood will continue to receive
100% of the available cash flow generated by the Willow Lake assets
until the earlier of the Orla plant in-service date or June 30,
2018, at which time the parties will receive distributions on a
50/50 basis.
Following the closing of this transaction, the joint venture
will own all of Crestwood’s Delaware Basin assets, which include
the Nautilus gas gathering system and the Willow Lake gas gathering
and processing system (including the announced gas processing plant
and Orla Express Pipeline). Once the Orla plant is placed into
service, the joint venture’s asset footprint will include over
200,000 acres of dedication, 255 MMcf/d of processing capacity, 300
MMcf/d of gathering capacity, and over 360 miles of pipe.
The Conflicts Committee of Crestwood’s Board of Directors
unanimously recommended this transaction, and the board unanimously
approved the transaction. The Willow Lake contribution is subject
to anti-trust review, and the parties expect to close the
transaction in June 2017.
About First Reserve
First Reserve is a leading global private equity and
infrastructure investment firm exclusively focused on energy. With
nearly 35 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 650 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.
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.
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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170524005321/en/
Investor ContactCrestwood Equity Partners LPJosh
Wannarka, 713-380-3081Vice President, Investor
Relationsjosh.wannarka@crestwoodlp.comorMedia
ContactFirst ReserveJoele Frank, Wilkinson Brimmer
KatcherJonathan Keehner / Julie Oakes,
212-355-4449joakes@joelefrank.com
Crestwood Equity Partners (NYSE:CEQP)
Historical Stock Chart
From Aug 2024 to Sep 2024
Crestwood Equity Partners (NYSE:CEQP)
Historical Stock Chart
From Sep 2023 to Sep 2024