DCP Midstream LLC (DCP Midstream), owner of DCP Midstream Partners’ 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 is investing capital to accommodate 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. The company anticipates completing its Mewbourn plant expansion by early 2011.
DCP Midstream Partners expects to spend approximately $18m 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 DCP Midstream Partners have agreed to a 10 year transportation agreement.
The $22m NGL pipeline acquisition was financed with borrowings under DCP Midstream Partners’ revolving credit facility.
