DCP Midstream is a joint venture between Phillips 66 and Spectra Energy.

Under terms of the transaction, DCP Midstream has contributed subsidiaries owning all of its assets to DPM, including $424m in cash.

The combined company will be renamed as DCP Midstream on 23 January 2017.

The cash contributed by DCP will be used to fund DPM’s growth projects, repay its revolver or prefund repayment of its debt maturing in December 2017.

DCP Midstream and DCP Midstream Partners chairman, president and CEO Wouter van Kempen said: “This transformational transaction provides a platform of premier assets with strong growth opportunities in the key U.S. producing basins at a multiple that paves the way towards future distribution growth.”

"The transaction benefits both our unitholders and our Owners with a simplified structure and is the logical progression following our successful DCP 2020 strategy execution to date.”

The transaction results in increasing the stake of Phillips 66 and Spectra Energy in DPM to 38%.

Beginning with expansion projects in the DJ Basin and on Sand Hills Pipeline, the new combined company is expected to create long-term platform for organic growth opportunities in the premier basins in the US.

DPM will build a new 200 MMcf/d cryogenic natural gas processing plant (Mewbourn 3) in the DJ Basin.

The plant is expected to become operational by the end of 2018.

It will also expand NGL takeaway capacity on Sand Hills Pipeline by 30%, or 85,000 barrels per day (bpd) to 365,000bpd.

DPM will invest approximately $70m for the Sand Hills expansion, which is expected to commence operations in the fourth quarter of 2017.

Image: The combined company will be renamed as DCP Midstream. Photo: courtesy of supakitmod/ FreeDigitalPhotos.net.