DCP Midstream Partners LP has completed the acquisition of an additional 25.1% ownership interest in DCP East Texas Holdings LLC from the owner of its general partner, DCP Midstream. Through the transaction -- which was financed through the issuance of partnership units to DCP Midstream, the partnership now owns 50.1% of the East Texas joint venture, with DCP Midstream owning the remaining interest.
The East Texas joint venture includes a 780 MMcf/d processing complex, approximately 900 miles of gathering pipelines, 25,000 hp of compression and the Carthage Hub, an exchange point for the purchase and sale of residue gas with aggregate delivery capacity of 1.5 Bcf/d. Last week the companies said they had fully restored operations at the East Texas complex following a Feb. 11 explosion and fire resulting from a third-party pipeline rupture (see Daily GPI, March 16).
"This transaction is immediately accretive to cash flow, increases our ownership position in the dynamic East Texas area and delivers on another key element of the business plan we committed to in December," said partnership CEO Mark Borer.
DCP Midstream contributed the 25.1% interest in exchange for 3.5 million Class D units. The Class D units will automatically convert into common units in August and will not be eligible to receive a distribution from the partnership until the second quarter distribution payable in August, according to the companies.
DCP Midstream said it also provided the partnership with a fixed-price natural gas liquids (NGL) hedge by NGL component for the period of April 2009 to March 2010 for the newly acquired interest. The transaction is expected to generate approximately $15 million of adjusted earnings before interest, taxes, depreciation and amortization for the partnership during the next twelve months.
Intelligence Press Inc. All rights reserved. The preceding news report
may not be republished or redistributed, in whole or in part, in any
form, without prior written consent of Intelligence Press, Inc.