DCP Midstream Partners LP Wednesday announced an agreement to acquire gas gathering and compression assets in Oklahoma from Anadarko Petroleum Corp. for $180.25 million in cash.

The midstream assets have historically gathered approximately 25 MMcf/d of production in Grady, Garvin and McClain counties in Oklahoma and delivered the unprocessed gas to a third party for processing. The gathering system consists of approximately 225 miles of pipeline and 9,500 horsepower of compression. The assets will be operated by the owner of the partnership's general partner, DCP Midstream LLC, formerly Duke Energy Field Services LLC.

"This acquisition extends DCP Midstream Partners' footprint into the Midcontinent area and provides operational synergies with assets currently owned and operated by DCP Midstream LLC," said CEO Mark Borer.

Gas is gathered under percentage-of-proceeds arrangements where the partnership's processing margin is related to the value of the gas liquids extracted during processing and the residue natural gas remaining after processing. To reduce the potential impact of fluctuations in commodity prices, the partnership plans to enter into hedging arrangements at closing.

The transaction is expected to close in the second quarter, subject to customary closing conditions, regulatory approval and the closing of EXCO Resources Inc.'s acquisition of Anadarko's production and leases dedicated to these midstream assets, which was announced on Feb. 2 (see Daily GPI, Feb. 5). The partnership intends to finance the acquisition with a combination of borrowings under its existing credit facility and issuance of partnership equity.

DCP Midstream Partners is managed by its general partner, DCP Midstream GP LLC, which is wholly owned by DCP Midstream LLC, a joint venture between Spectra Energy and ConocoPhillips.

In August 2006, Anadarko acquired Kerr-McGee Corporation and Western Gas Resources, Inc. in separate transactions (see Daily GPI, Aug. 24, 2006; June 26, 2006). Since then Anadarko has been on a campaign to pare down acquisition debt, which so far has met with a good deal of success (see Daily GPI, Jan. 30; Dec. 13, 2006).

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