Crestwood Equity Partners LP has taken full ownership of the Jackalope Gas Gathering System and Bucking Horse Processing Plant in Converse County, WY, after acquiring the other half stake from Williams for $485 million in cash.

Crestwood has been the marketer for Jackalope Gas Gathering Services LLC, but the company jumped on the opportunity to take on Williams’ role as operator. The transaction, Crestwood CEO Robert Phillips said, positions the midstreamer to be one of the largest gathering and processing companies in the Powder River Basin (PRB).

With full ownership in Jackalope, Crestwood’s position in the region doubles and is expected to help drive cost reductions and synergies. The company plans to retain Williams employees who currently operate the assets. Crestwood anticipates lowering expenses by up to $8 million now that it has full control.

“By already owning 50% of the Jackalope system, our teams have an in-depth understanding of the economics of the PRB, the development plans and corresponding requirements for our existing and prospective customers, and the long-term prospects for future growth” in the area, Phillips said.

Crestwood funded the transaction with a combination of debt and preferred equity. It also revised its 2019 financial guidance, including an increase in growth capital project spending to $425-475 million.

For Williams, the proceeds from the deal allow it to reduce debt and fund growth in other parts of its portfolio. The company also plans to update its guidance when it releases 1Q2019 results.

“This win-win transaction frees up capital that we can redeploy into high-return assets that are better linked to our strategy, while providing Crestwood with the entire ownership of an asset that is key to their PRB strategy,” CEO Alan Armstrong said.

The Jackalope system is averaging gathering volumes of 140 MMcf/d, or 12% more than it was taking on at the end of last year. Crestwood expects continued growth on the system, as it’s supported by a sprawling 358,000 acreage dedication from Chesapeake Energy Corp. and another 30,000 acre dedication from Panther Energy Co. LLC.

Chesapeake has been a major contributor to the PRB’s resurgence. While the company has assets across the country, the primary focus this year is on the PRB and Eagle Ford Shale to boost oil volumes. Chesapeake is currently running five rigs in the PRB, where it plans this year to turn 64 wells online in the Turner formation, a tight sands play. The company and other operators have also touted multiple horizons in the basin, such as the Teapot, Parkman, Niobrara, Sussex and Mowry.

“Given the current outlook, we expect the PRB to be Crestwood’s second largest growth driver in 2019 and 2020 due to strong producer economics, top notch reservoir quality and the strong forecast of volume growth in the basin by Chesapeake and other notable offset producers,” Phillips told investors during the year-end earnings call in February. He noted too that 2019 would be a key year for Jackalope’s growth trajectory given the rise in PRB activity.

Both the Bucking Horse and Jackalope assets are being expanded in anticipation of more volumes, Crestwood said. Gathering and processing on the system is being increased to 345 MMcf/d. The expansion projects, including line looping and system compression, are expected to come online in 1Q2020.

Evercore ISI recently reported strong oil and gas permitting across the Lower 48 during the first quarter. In a sign of the growing interest in the Rockies, permitting in the Denver-Julesburg Basin and PRB together surpassed activity in the Permian Basin, which has been the country’s hottest onshore play.