Under the terms of the agreement, JP Energy will also provide crude oil trucking, marketing and related services for Discovery.
JP Energy CEO Patrick Barley said: "The Midland Basin is a key area of focus for JP Energy, and we believe that our Silver Dollar Pipeline is a strategic and well-positioned crude oil gathering system.
"We are excited to use the market knowledge we have gained through our existing operations in the Permian Basin and Eagle Ford to partner with Discovery and further expand our comprehensive crude oil midstream solution.
The gathering system extension will include approximately 55 miles of pipeline, which will extend from southern Reagan County into Glasscock County across some drilling areas in the Midland Basin.
Barley said: "We expect that as Discovery and other producers continue to develop the Spraberry, Wolfberry and Wolfcamp plays of the Midland Basin, JP Energy’s locational advantages and broad range of logistical capabilities will prove valuable to both the producer community and downstream customers in the crude oil markets."
Planned to be completed in the second half of 2015, the $36m project will be accretive to distributable cash flow per unit upon completion, the company said.
