DCP Midstream Partners Expands Natural Gas Liquids Business With $22 Million Acquisition of Rockies Pipeline
DENVER, Jan. 28 /PRNewswire-FirstCall/ -- DCP Midstream Partners, LP (NYSE: DPM) (the "Partnership") today announced that it has acquired an interstate natural gas liquids (NGL) pipeline system from Buckeye Partners, L.P. (NYSE: BPL) for $22 million in cash. The 350 mile pipeline originates in the Denver-Julesburg ("DJ") Basin in Colorado and terminates near the Conway hub in Bushton, Kansas. DCP Midstream, LLC ("DCP Midstream"), owner of the Partnership's general partner, currently utilizes the NGL pipeline as a market outlet for NGL production from certain of its plants in the DJ Basin.
DCP Midstream, the largest gatherer and processor in the DJ Basin, is investing capital to accommodate growing demand from its producers for natural gas gathering and processing capacity, including a new natural gas processing plant at its Mewbourn facility and a new large diameter natural gas gathering pipeline. DCP Midstream anticipates completing its Mewbourn plant expansion by early 2011. "We believe the acquisition of the NGL pipeline by the Partnership will benefit our customers by maintaining a critical outlet for increased NGL production in the DJ Basin," said Tom O'Connor, chairman, president and CEO of DCP Midstream.
The Partnership expects to spend approximately $18 million in expansion capital to connect and integrate the acquired pipeline with DCP Midstream's facilities, with cash flow contributions commencing in early 2011. In conjunction with the acquisition, DCP Midstream and the Partnership have agreed to a 10 year transportation agreement.
"We are very pleased to have the opportunity to expand our NGL business with a project that is mutually beneficial to the Partnership, DCP Midstream, and its producer customers," said Mark Borer, president and CEO of the Partnership. "Given the pipeline's proximity to DCP Midstream's existing gathering and processing facilities, this acquisition and subsequent capital projects represent a strategic investment for the DCP enterprise. The investment is consistent with our strategies of optimizing our asset base and executing on growth opportunities around our footprint. The 100 percent fee-based earnings profile of this pipeline is an excellent fit within our asset portfolio."
The $22 million NGL pipeline acquisition was financed with borrowings under the Partnership's revolving credit facility.
DCP Midstream Partners, LP (NYSE: DPM) is a midstream master limited partnership that gathers, processes, transports and markets natural gas, transports and markets 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 http://www.dcppartners.com.
DCP Midstream, LLC, headquartered in Denver, Colorado, leads the midstream segment as one of the nation's top three largest natural gas gatherers and processors, and the largest natural gas liquids producer and one of the largest marketers in the U.S. DCP Midstream operates in 17 states across producing regions. DCP Midstream is a 50:50 joint venture between Spectra Energy and ConocoPhillips. The Company owns the General Partner of DCP Midstream Partners, LP, a master limited partnership, and provides operational and administrative support to the partnership. For more information, visit the DCP Midstream, LLC Web site at http://www.dcpmidstream.com.
Buckeye Partners, L.P. (www.buckeye.com) is a publicly traded partnership that owns and operates one of the largest independent refined-petroleum products pipeline systems in the United States in terms of volumes delivered, with approximately 5,400 miles of pipeline. Buckeye Partners, L.P. also owns 67 refined-petroleum products terminals, operates and maintains approximately 2,400 miles of pipeline under agreements with major oil and chemical companies, owns a major natural gas storage facility in northern California, and markets refined-petroleum products in certain of the geographic areas served by its pipeline and terminal operations. The general partner of Buckeye Partners, L.P. is owned by Buckeye GP Holdings L.P. (NYSE: BGH).
This press release contains forward-looking statements as defined under the federal securities laws regarding DCP Midstream Partners, LP, including projections, estimates, forecasts, plans and objectives. Although management believes that expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to be correct. In addition, these statements are subject to certain risks, uncertainties and other assumptions that are difficult to predict and may be beyond our control. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, the Partnership's actual results may vary materially from what management anticipated, estimated, projected or expected.
Investors are encouraged to closely consider the disclosures and risk factors contained in the Partnership's annual and quarterly reports filed from time to time with the Securities and Exchange Commission. The Partnership undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Information contained in this press release is unaudited, and is subject to change.
SOURCE DCP Midstream Partners, LP