Crestwood Equity Announces Expansion Projects in the Delaware Permian Basin and Strategic Joint Venture with First ReserveCommencement of a Non-Binding Open Season for its Proposed “Delta” Crude and Condensate Pipeline
Expansion of Strategic Partnership with First Reserve
HOUSTON, TEXAS, – October 28, 2015 – Crestwood Equity Partners LP (NYSE: CEQP) (“Crestwood” or “CEQP”) today announced a non-binding open season to seek shipper support for the Delaware Takeaway crude pipeline system (“Delta”), a ~164 mile crude and condensate pipeline header system originating at a new Crestwood terminal to be built near Orla, TX (located in Reeves County), with potential downstream connections to multiple downstream interconnects that will provide shippers access to attractive end markets including El Paso, Midland, Cushing, Houston and Corpus Christi. As designed, Delta will have the capability to batch multiple grades of crude and condensate, and initially transport over 200,000 barrels per day. The project may be further expanded based on the results of the open season. Delta is expected to be operational in the second quarter of 2017.
Crestwood is in exclusive negotiations with a large producer in the Delaware Permian Basin to anchor a large scale 3-stream gathering system spanning portions of Reeves, Loving, and Culberson counties, TX, that will aggregate crude and condensate volumes to Crestwood’s Orla Terminal. As currently designed, the 3-stream gathering system would consist of approximately 600 miles of pipelines and will span an area in excess of 400,000 acres. The Orla Terminal is planned to initially provide approximately 200,000 bbls of storage, truck loading and unloading facilities, blending services, multiple upstream and downstream pipeline connections, and will potentially provide condensate stabilization services for Wolfcamp production.
“The Delta pipeline is designed to provide optimal netbacks for our gathering system producers, as well as other producers and marketers active in the surrounding areas,” stated Heath Deneke, Crestwood’s Chief Operating Officer and President of the Pipeline Services Division. “Delta was designed specifically for producers seeking long term optionality to access multiple downstream pipelines and markets and also has the operational capability to batch specific grades of crude oil and condensate,” added Deneke. “We are also pleased to announce the significant progress that we have made on the development of the large scale 3-stream gathering system that would bring significant crude and condensate supplies into the Orla Terminal. We expect to conclude negotiations with our gathering system anchor producer in the near future,” Deneke further stated.
The open season period will begin on Wednesday, October 28, 2015 at 9:00 AM CST and will close on Monday, December 7, 2015 at 4:00 PM CST. For commercial inquiries or additional information related to the open commitment period, please contact Russ Kovin (832-519-2260 and firstname.lastname@example.org), Mindy Hagerman (832-519-2261 and email@example.com), or Brian Freed (832-519-2273 and firstname.lastname@example.org).
First Reserve Strategic Partnership
In connection with Crestwood’s Delaware Permian Basin expansion opportunities, First Reserve, the largest global private equity and infrastructure investment firm exclusively focused on energy, and Crestwood are in exclusive negotiations to form a development joint venture dedicated to support growing producer demand for midstream infrastructure in the basin. Under the terms of the joint venture, First Reserve and Crestwood will initially commit equity capital of $500 million, which will be available to the joint venture for financing identified greenfield development and acquisition opportunities in an area of mutual interest spanning Reeves, Culberson and Loving counties, TX. 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 to the joint venture during the early-stage build-out of the systems, after which Crestwood will fund 100% of capital requirements for a period of time to achieve the 50/50 capital structure.
“The Delaware Permian Basin is the most active shale play in the US, and Crestwood is well-positioned with current assets and future projects to build significant midstream infrastructure in the area and provide much needed midstream solutions for our producer customers,” said Deneke. “With First Reserve’s capital and strategic partnership, we are aggressively moving forward with expansion projects to support our producers’ development plans largely focused on the Wolfcamp formation. The Wolfcamp formation remains substantially economic to develop and produce, even at today’s lower commodity prices, and the development of midstream infrastructure remains vitally important to providing optimal market outlets for supply development. Crestwood brings significant operating experience across the most productive natural gas, NGL and crude oil shale plays in the US to ensure our producers receive the highest net-backs and access to markets for these new supplies,” Deneke further stated.
Gary Reaves, Managing Director of First Reserve, stated, “First Reserve is excited to expand our relationship with Crestwood, particularly in this prolific area of the Delaware Permian Basin, which we believe remains underserved from a midstream standpoint. As general partner of Crestwood, we remain highly committed to the growth and success of both Crestwood and this new partnership and are excited to continue to support management as they pursue these growth opportunities. First Reserve has significant experience in this area of the Delaware Permian through our ownership interest in RKI Exploration, whose Permian assets were recently sold to WPX Energy. In addition to capital support, we look forward to bringing our expertise, experience and relationships to the joint venture with Crestwood to take advantage of these midstream growth opportunities in an area where Crestwood has great assets and deep experience in building and operating these type of facilities.”
The closing of the joint venture is subject to final execution of definitive documentation, customary and other closing conditions, including the approvals for Crestwood’s Board of Directors and Special Committee as well as First Reserve’s Investment Committee.
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 the largest 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 550 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.
The statements in this news release regarding future events, occurrences, circumstances, activities, performance, outcomes and results are forward-looking statements. Although these statements reflect the current views, assumptions and expectations of Crestwood’s management, the matters addressed herein are subject to numerous risks and uncertainties which could cause actual activities, performance, outcomes and results to differ materially from those indicated. Such forward-looking statements include, but are not limited to, statements about the future financial and operating results, objectives, expectations and intentions and other statements that are not historical facts. Factors that could result in such differences or otherwise materially affect Crestwood’s financial condition, results of operations and cash flows include, without limitation, the possibility that expected synergies will not be realized, or will not be realized within the expected timeframe; fluctuations in crude oil, natural gas and NGL prices; the extent and success of drilling efforts, as well as the extent and quality of natural gas and crude oil volumes produced within proximity of Crestwood assets; failure or delays by customers in achieving expected production in their oil and gas projects; competitive conditions in the industry and their impact on our ability to connect supplies to Crestwood gathering, processing and transportation assets or systems; actions or inactions taken or non-performance by third parties, including suppliers, contractors, operators, processors, transporters and customers; the ability of Crestwood to consummate acquisitions, successfully integrate the acquired businesses, realize any cost savings and other synergies from any acquisition; changes in the availability and cost of capital; operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond Crestwood’s control; timely receipt of necessary government approvals and permits, the ability of Crestwood to control the costs of construction, including costs of materials, labor and right-of-way and other factors that may impact Crestwood’s ability to complete projects within budget and on schedule; the effects of existing and future laws and governmental regulations, including environmental and climate change requirements; the effects of existing and future litigation; and risks related to the substantial indebtedness, of either company, as well as other factors disclosed in Crestwood Equity’s and Crestwood Midstream’s filings with the U.S. Securities and Exchange Commission. You should read filings made by Crestwood with the U.S. Securities and Exchange Commission, including Annual Reports on Form 10-K and the most recent Quarterly Reports and Current Reports for a more extensive list of factors that could affect results. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management’s view only as of the date made. Crestwood does not assume any obligation to update these forward-looking statements.
Source: Crestwood Equity Partners LP
Crestwood Equity Partners LP
Josh Wannarka, 713-380-3081
Vice President, Investor Relations