Tesoro Logistics LP (TLLP) has completed its $2.5 billion acquisition of Denver-based QEP Resources Inc.’s natural gas gathering and processing business and other midstream units. The deal was originally announced in October (see Shale Daily, Oct. 20).

The sale included $230 million to refinance debt at QEP Midstream Partners LP, which was part of the deal, along with QEP Field Services LLC.

With the sale, QEP is expected to focus more on the exploration and production (E&P) side of its business, while San Antonio-based Tesoro Logistics, a master limited partnership formed in 2011 by Tesoro Corp., is using the acquisition to expand into gas handling and marketing, in addition to its primary focus on crude oil products.

“The closing of this acquisition marks a significant step toward our vision to create a full-service, integrated logistics company that will continue to deliver exceptional EBITDA [earnings before interest, taxes, depreciation and amortization] and distribution growth for our unitholders,” said Tesoro CEO Greg Goff.

Tesoro’s partnership now owns 2,000 miles of gas and crude oil gathering and transmission pipelines in North Dakota and the Rockies, giving it gas throughput capacity of 2.9 Bcf/d and crude oil capacity of 54,000 b/d.

A Tesoro spokesperson said the acquisition also includes four natural gas processing complexes with a collective capacity of 1.5 Bcf/d, and one fractionation facility with a 15,000 b/d throughput capacity.

“The partnership has also acquired the QEP Resources Inc. general partner interest and incentive distribution rights, as well as 3.7 million common units and 26.7 million subordinated units of QEP Midstream,” the spokesperson said. “The partnership also intends to enter into a contractual arrangement with Tesoro Corp. that is expected to substantially reduce the commodity exposure related to certain natural gas processing contracts held by QEP Field Services.”

Noting that TLLP expects $250-$275 million of EBITDA next year before transaction and integration expenses from the QEP acquisition, Tesoro officials have indicated the partnership expects to spend about $100 million in 2015 for “identified growth capital projects relating to the acquired assets.” That would add gas gathering pipelines to support expected production growth in the 10-15% range next year in the areas of operation, such as the Bakken shale play.

“Our strategy is to drive growth through asset optimization, organic growth and strategic acquisitions,” Goff said.