DCP Midstream and DCP Midstream Partners Announce Acquisitions
o DCP Midstream Expands Operating Footprint Into New Basins With $635 Million Acquisition
o DCP Midstream Partners Agrees to Acquire Certain Assets From General Partner for $165 Million
DENVER, May 21 / -- DCP Midstream, LLC today announced an agreement to acquire the stock of Momentum Energy Group Inc. (MEG) for $635 million, subject to closing adjustments. MEG is a portfolio company of investment firms including Yorktown Energy Partners LLC, Banc of America Capital Investors and Lehman Brothers MLP Partners, L.P. Contingent upon the closing of the transaction between DCP Midstream and MEG, DCP Midstream Partners (NYSE:DPM), or the Partnership, will acquire certain subsidiaries of MEG from DCP Midstream for $165 million, subject to closing adjustments. DCP Midstream, LLC owns the general partner of the Partnership. Both transactions are expected to close during the third quarter of this year. These transactions mark the combined enterprise's entry into three prominent producing basins: Fort Worth, Piceance and Powder River.
Assets Acquired by DCP Midstream, LLC MEG has established quality asset positions in the following basins:
o Fort Worth Basin
The 150-mile Tolar system gathers and processes natural gas
produced from the prolific Barnett Shale formation, serving over
300,000 dedicated acres in Parker, Hood, Erath, Palo Pinto and
Somervell counties in Texas. Both the gathering system and
processing plant with current capacity of 80 million cubic feet
per day (MMcfd) are under expansion to accommodate increased
drilling.
o Piceance Basin
The 31-mile Collbran Valley Gas Gathering system joint venture, in
which MEG owns a 70 percent interest, gathers and processes
natural gas from over 20,000 dedicated acres in the southern
Piceance Basin in western Colorado. The processing facility
capacity is currently being expanded from 60 MMcfd to 120 MMcfd.
The other partners in the joint venture, Laramie Energy and Delta
Petroleum, are also producers on the system.
o Powder River Basin
The 1,324-mile Douglas gas gathering system gathers approximately
30 MMcfd of gas and covers more than 4,000 square miles of the
Powder River Basin in Wyoming. Also included is the idle Painter
Unit fractionator and Millis terminal, and associated NGL
pipelines currently leased to a third party in southwest Wyoming.
"This acquisition is consistent with our new basin growth strategy. In addition to extending our operating footprint into three prominent basins, we believe the acquisition will create substantial economic value for DCP Midstream and DCP Midstream Partners," said William Easter III, chairman, president and CEO of DCP Midstream. "As importantly, we believe we can help the producers on these systems maximize their value. We have relationships with several of the existing producers. We look forward to partnering with them and providing outstanding customer service in the process."
DCP Midstream plans to finance the acquisition with debt. Merrill Lynch & Co. acted as exclusive financial advisor to DCP Midstream on the acquisition.
Assets Acquired by DCP Midstream Partners
The Partnership will acquire the Piceance Basin assets, which include the 70 percent operated interest in the Collbran Valley Gas Gathering system joint venture, the Powder River Basin assets, which include the Douglas gas gathering system, and Painter Unit fractionator and related facilities from DCP Midstream, LLC, for $165 million, subject to closing adjustments and contingent upon the close of DCP Midstream's purchase of MEG.
DCP Midstream will manage and operate these assets on the Partnership's behalf.
"This transaction allows us to continue to deliver exceptional value to our unitholders by growing and diversifying our business into new operating areas while providing immediate accretion to distributable cash flow. Furthermore, this transaction is expected to deliver future opportunities to deploy growth capital in these new basins," said Mark Borer, president and CEO of the Partnership.
The Partnership plans to finance the acquisition from DCP Midstream with a combination of equity, cash and debt.
This acquisition by the Partnership is distinct from the previously announced approximately $250 million acquisition from DCP Midstream targeted for the end of the second quarter.
DCP Midstream, LLC, headquartered in Denver, Colorado, is one of the nation's largest natural gas gatherers and processors, and one of the largest natural gas liquids (NGLs) producers and NGL marketers. DCP Midstream operates in 16 states across the five largest natural gas producing regions in the United States. DCP Midstream is a 50:50 joint venture between Spectra Energy and ConocoPhillips. For more information, visit the DCP Midstream Web site at www.dcpmidstream.com.
DCP Midstream Partners, LP (NYSE:DPM) is a midstream master limited partnership that gathers, processes, transports and markets natural gas and natural gas liquids and is a leading wholesale distributor of propane. DCP Midstream Partners, LP is managed by its general partner, DCP Midstream GP, LLC, which is wholly owned by DCP Midstream, LLC, a joint venture between Spectra Energy and ConocoPhillips. For more information, visit the DCP Midstream Partners, LP Web site at www.dcppartners.com/.
FCMN Contact: kltaylor@dcppartners.com
http://www.dcppartners.com
Source: DCP Midstream; DCP Midstream Partners
CONTACT: Karen Taylor of DCP Midstream, +1-303-633-2913, or 24-Hour,
+1-303-809-9160
Web site: www.dcpmidstream.com/
