Western Gas Partners has agreed to acquire certain midstream assets located in the DJ Basin of northeastern Colorado from Encana Oil & Gas (USA) for a total consideration of $303.3m.
As per the terms of the agreement, Western Gas will purchase Encana‘s Ft Lupton processing plant, which is adjacent to Western Gas’s Ft Lupton plant.
The Encana plant, currently flowing at capacity, consists of two cryogenic processing trains with 84 million cubic feet per day (mmcf/d) of total capacity and is currently being expanded to 100mmcf/d.
The plant also has two fractionation trains with total capacity of 7,900 barrels per day.
Western Gas will also purchase five gathering systems that consist of approximately 1,054 miles of pipeline, 18 compressors with a total of 14,306 horsepower, and other related assets.
Two of these gathering systems are connected directly to Encana’s Ft Lupton plant, while the other three gathering systems deliver natural gas to Encana’s Ft Lupton plant through Western Gas’s Wattenberg gathering system.
As part of the acquisition, Western Gas will enter into long-term, fee-based agreements with Encana to gather and process existing gas production, as well as to expand the existing gathering systems and processing capacity to meet future needs in the basin.
Western Gas intends to finance the acquisition with available capacity under its $450m revolving credit facility and expects the transaction to close in the first quarter of 2011.