Crestwood Equity Partners LP announced a trio of transactions to more than double its natural gas processing capacity in the Permian Basin’s Delaware formation, and to divest its position in the Barnett Shale.
The largest of the three deals would see Crestwood acquire Sendero Midstream Partners LP for $600 million. Located entirely in Eddy County, NM, the Sendero assets comprise 350 MMcf/d of processing capacity, about 140 miles of gas gathering lines, and more than 53,000 hp of field gathering compression.
“As the commodity price outlook remains favorable for an acceleration of activity across the basin, this expanded footprint positions Crestwood to aggressively pursue third-party volumes to further optimize utilization of existing infrastructure,” management said.
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Crestwood also has agreed to trade units valued at $320 million to buy the remaining 50% stake held by private equity firm First Reserve in Crestwood Permian Basin Holdings LLC (CPJV). Crestwood also would assume $75 million in debt.
CPJV is a 50/50 partnership between Crestwood and First Reserve. Assets include the Willow Lake gas gathering system in Eddy County, a 200 MMcf/d gas processing facility in Orla, TX, the 33-mile Orla Express Pipeline and a produced water gathering and disposal system in Texas’ Culberson and Reeves counties.
Finally, Crestwood plans to divest its legacy Barnett assets to EnLink Midstream LLC for $275 million.
The divested assets include the Alliance, Lake Arlington and Cowtown gas gathering and processing systems, “representing a full exit from the Barnett Shale,” Crestwood said. Cash proceeds would help fund the Sendero acquisition.
All three deals are slated to close early in the third quarter, pending regulatory approval, Crestwood said.
The transactions “greatly enhance the Crestwood franchise by creating immediate scale and additional runway in the Delaware Basin, high-grading our cash flow mix through the rationalization of non-core assets, and successfully maintaining our conservative balance sheet and financial flexibility,” said CEO Robert Phillips.
“The acquisition of Sendero Midstream is highly complementary to our existing Willow Lake assets, provides excess processing and compression capacity for current and future customer development activity, and solidifies Crestwood’s footprint in the leading North American shale play.”
Phillips said the Barnett divestiture “marks the culmination of our long-term investment and operating footprint” in the North Texas play, considered the birthplace of the modern U.S. shale industry.
“As we close this chapter in Crestwood’s history, we will continue to focus on building and optimizing our sizeable gathering and processing positions in the Williston Basin, Delaware Basin, and Powder River Basin,” Phillips added.
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