DCP Midstream Partners has moved to increase its market position in East Texas, agreeing to pay Penn Virginia Resource Partners LP (PVR) approximately $63 million for the Crossroads processing plant and associated gathering system in Harrison County, TX, the two companies said.

Included in the deal are the 80 MMcf/d cryogenic processing plant, approximately eight miles of gas gathering pipe, 20 miles of natural gas liquids (NGL) pipeline and a 50% ownership in an 11-mile residue gas pipeline.

The system would allow DCP to increase midstream services to producers that are expanding liquids-rich Haynesville Shale and Cotton Valley drilling programs in East Texas, the partnership said. “The addition of the Crossroads system is a synergistic bolt-on acquisition to our existing East Texas system and will expand our processing capabilities to support our customers’ growth,” said DCP CEO Mark Borer.

The deal is expected to close by July 2. DCP intends to use borrowings under its credit facility to finance the acquisition. PVR said it expects to recognize a gain of $30-33 million as a result of the transaction.

PVR recently said it was buying Chief Gathering LLC, which serves northeastern Pennsylvania Marcellus Shale producers, for $1 billion (see Shale Daily, April 11). The partnership last month expanded its midstream operations in the Marcellus by inking agreements with four of the biggest natural gas producers to extend its Lycoming County, PA, pipeline system to provide access to multiple markets (see Shale Daily, May 22).

The Crossroads assets “were no longer strategic to PVR as we focus our midstream business in the Marcellus Shale and the Panhandle region of Texas and Oklahoma,” said William H. Shea Jr., who is CEO of PVR’s general partner. “We concluded that it was in the best interests of PVR to redeploy the capital to the higher-return organic growth projects we are executing on in the Marcellus and Panhandle regions.”