Shell dedicates approximately 100,000 acres in Loving, Reeves and
Ward counties, Texas to Crestwood under a long-term gas gathering
agreement
Joint venture with First Reserve to finance the gathering system and
pursue other growth opportunities in the Delaware Basin
HOUSTON--(BUSINESS WIRE)--
Crestwood Equity Partners LP (NYSE: CEQP) (“Crestwood”) announced today
that it has entered into a long-term agreement with SWEPI LP (“SWEPI”),
a subsidiary of Royal Dutch Shell plc, to construct, own and operate a
natural gas gathering system in Shell’s operated position in the Permian
- Delaware Basin. The system will be owned through Crestwood’s
previously announced joint venture with First Reserve, Crestwood’s
indirect general partner and largest unitholder, which was formed to
finance and own midstream infrastructure in the Delaware Basin.
Crestwood estimates the full build-out of the gas gathering system will
cost approximately $180 million. Project development activities are
underway with a targeted initial in-service date on or before July 1,
2017.
SWEPI will provide Crestwood with a dedication of approximately 100,000
acres and gathering rights for SWEPI gas production across a large
acreage position in Loving, Reeves and Ward counties, Texas. The initial
gathering system is designed for gas production of approximately 250
million cubic feet per day and will include 194 miles of low pressure
gathering lines, 36 miles of high pressure trunklines, and centralized
compression facilities which are expandable over time as production
increases. Crestwood will provide gathering, dehydration, compression
and liquids handling services on a fixed fee basis. Additionally, Shell
has the option to purchase up to a 50 percent equity interest in the
system prior to September 1, 2017.
Robert G. Phillips, Chairman, President and Chief Executive Officer of
Crestwood’s general partner, stated, “We are pleased to enter into this
important, long-term gathering agreement with SWEPI in the prolific
Permian Basin where Shell has been developing its premier Delaware Basin
acreage position since 2012. This agreement demonstrates Crestwood’s
strong operating track record in the Marcellus, Bakken, Barnett and
Delaware basins and our leading commitment to customer service, safe and
reliable operations and environmental stewardship.”
Mr. Phillips continued, “Importantly, the Delaware Basin joint venture
with First Reserve will provide Crestwood with additional financial
flexibility to invest in this great long-term growth project while
maintaining a disciplined balance sheet and strong distribution
coverage. With the financial structure from our joint venture and the
targeted in-service date for the new natural gas gathering system, we
expect the investment will be accretive to Crestwood as early as late
2017 and, in any event, fully accretive to Crestwood in 2018.
Additionally, with First Reserve’s support and incremental capital
commitment to the joint venture, Crestwood is very well positioned
financially to execute on the SWEPI opportunity and other midstream
opportunities in the Delaware Basin, including the previously announced
3-stream gathering system in Reeves, Loving, & Culberson counties, Texas
which remains under exclusivity with an anchor shipper.”
First Reserve Joint Venture
First Reserve, a leading global private equity and infrastructure
investment firm exclusively focused on energy, and Crestwood have
previously announced the formation of a joint venture to finance and own
midstream projects in the Delaware Basin. Under the terms of the joint
venture, which will be owned 50% by Crestwood and 50% by First Reserve,
First Reserve will fund 100% of the initial capital requirements during
the early-stage build-out of the gathering system, after which Crestwood
will fund 100% of capital requirements until such time as both parties
have funded an equal amount of capital. Additionally, Crestwood and
First Reserve will make an initial pledge up to a combined $500 million
for the joint venture to pursue incremental midstream infrastructure
growth opportunities in the Delaware Basin, including the previously
announced 3-stream gathering system currently under exclusivity with an
anchor shipper. Crestwood will fund its portion of capital with
internally generated cash flow and borrowings under its revolving credit
facility.
Gary Reaves, Managing Director of First Reserve, stated, “First Reserve
is pleased to partner with Crestwood to develop a premier gas gathering
system in the core of the Delaware Basin. The joint venture with
Crestwood serves as a strong platform for Crestwood and First Reserve to
pursue incremental opportunities in the Delaware Basin which, in our
view, is currently the most attractive onshore resource play in the
United States. As general partner of Crestwood, we remain highly
committed to the success of Crestwood and view the opportunity as
recognition of Crestwood’s ability to capture greenfield projects and
operate as an industry leading midstream provider of gathering services.”
Forward-Looking Statements
This news release contains forward-looking statements within the meaning
of the U.S. Private Securities Litigation Reform Act of 1995 and Section
21E of the Securities and Exchange Act of 1934. The words “expects,”
“believes,” anticipates,” “plans,” “will,” “shall,” “estimates,” and
similar expressions identify forward-looking statements, which are
generally not historical in nature. Forward-looking statements are
subject to risks and uncertainties and are based on the beliefs and
assumptions of management, based on information currently available to
them. Although Crestwood believes that these forward-looking statements
are based on reasonable assumptions, it can give no assurance that any
such forward-looking statements will materialize. Important factors that
could cause actual results to differ materially from those expressed in
or implied from these forward-looking statements include the risks and
uncertainties described in Crestwood’s reports filed with the Securities
and Exchange Commission, including its Annual Report on Form 10-K and
its subsequent reports, which are available through the SEC’s EDGAR
system at www.sec.gov
and on our website. Readers are cautioned not to place undue reliance on
forward-looking statements, which reflect management’s view only as of
the date made, and Crestwood assumes no obligation to update these
forward-looking statements.
About Crestwood Equity Partners LP
Houston, Texas, based Crestwood Equity Partners LP (NYSE: CEQP) is a
master limited partnership that owns and operates midstream businesses
in multiple unconventional shale resource plays across the United
States. Crestwood Equity is engaged in the gathering, processing,
treating, compression, storage and transportation of natural gas;
storage, transportation, terminalling, and marketing of NGLs; and
gathering, storage, terminalling and marketing of crude oil.
About First Reserve
First Reserve is a leading global private equity and infrastructure
investment firm exclusively focused on energy. With over 30 years of
industry insight, investment expertise and operational excellence, the
Firm has cultivated an enduring network of global relationships and
raised approximately USD $31 billion of aggregate capital since
inception. Putting these to work, First Reserve has completed more than
575 transactions (including platform investments and add-on
acquisitions) on six continents. Its portfolio companies span the energy
spectrum from upstream oil and gas to midstream and downstream,
including resources, equipment and services and infrastructure. Visit us
at www.firstreserve.com
for more information.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160927006529/en/
Source: Crestwood Equity Partners LP