DCP Midstream Partners LP Wednesday said it has agreed to acquire partial interests in DCP East Texas Holdings LLC and Discovery Producer Services LLC from DCP Midstream LLC, the owner of its general partner. The $270 million transaction, which is $20 million higher than previously announced, is expected to close July 2.
The transaction includes a 25% nonoperated interest in DCP East Texas Holdings LLC. The East Texas assets, an integrated gas gathering and processing complex located primarily in Panola County, TX, consist of a gas processing complex with capacity of 780 MMcf/d; about 900 miles of gathering lines with more than 1,500 receipt points and more than 25,000 hp of compression; and the Carthage Hub, with aggregate delivery capacity of 1.5 Bcf/d, which delivers residue gas to multiple interstate and intrastate pipelines. The East Texas assets will continue to be operated by DCP Midstream, LLC.
The transaction also includes DCP Midstream LLC's 40% nonoperated interest in Discovery Producer Services LLC. The Discovery Producer assets, operated by The Williams Companies, offer a full range of wellhead to market services to both onshore and offshore gas producers. The assets are primarily located in the eastern Gulf of Mexico and Lafourche Parish, LA, and consist of 270 miles of deepwater Gulf of Mexico gathering and FERC-regulated transmission pipelines; the 600 MMcf/d LaRose gas processing plant; and the 32,000 b/d Paradis fractionator.
"With strong drilling around the East Texas assets and the new Tahiti Expansion coming online in 2008 for Discovery, these two assets strengthen the partnership's position to compete for organic growth opportunities," said DCP Midstream Partners CEO Mark Borer. "This transaction, combined with the $180 million purchase of gathering and compression assets from Anadarko Petroleum that closed in May [see Daily GPI, March 8] and the recently announced agreement to drop down $165 million of gathering and processing assets from our general partner, subject to its purchase of those assets from Momentum Energy Group, Inc., total over $600 million in high-quality growth acquisitions for the partnership that either have closed or are planned to close in 2007."
The partnership plans to finance the purchase with a combination of debt and equity. The transaction will be immediately accretive to the partnership's unitholders on a per-unit basis. As part of the agreement, DCP Midstream LLC will bear the cost to complete Discovery's Tahiti Expansion.
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