MIDSTREAM NEWS

Multifuels Acquires Gas Pipeline System in Central Texas

Multifuels Midstream Group LLC, a portfolio company of Warren Equity Partners, recently purchased 124 miles of high pressure gas pipeline in Central Texas from a large publicly traded master limited partnership, and will repurpose the pipeline with new pipe construction; new interconnects including gas measurement and pressure regulation. The completed pipeline system will serve end use customers in the Bastrop to Hallettsville, TX corridor, via an anchor long term contract. The new construction is expected to be completed by end of 2018. The acquisition is Warren Equity Partners' first add-on to its Multifuels platform investment, which was closed in January 2016 in partnership with Multifuels LP.

DCP Midstream to drop down all remaining assets to DPM for ~$3.85B

DCP Midstream LLC (Midstream), a 50/50 joint venture between Phillips 66 and Spectra Energy (owners), and DCP Midstream Partners LP, signed and closed a transaction combining all of the assets and debt of Midstream with DPM, creating the largest natural gas liquids (NGL) producer and gas processor in the United States with a pro-forma enterprise value of approximately $11 billion. Under terms of the transaction, Midstream has contributed subsidiaries owning all of its assets to DPM, plus $424 million of cash, in exchange for approximately 31.1 million DPM units ($1.125 billion) and DPM assuming $3.15 billion of Midstream debt, for an estimated transaction multiple of approximately eight times based on current commodity strip prices. The cash proceeds of $424 million contributed to DPM will be used to repay its revolver, fund its growth projects or prefund repayment of DPM debt maturing in December 2017. The owners have retained their 50/50 joint ownership of DCP Midstream LLC, which owns the incentive distribution rights (IDRs) and 38% of the outstanding DPM general and limited partner units. To support a minimum 1.0 times distribution coverage ratio, the owners have agreed, if required, to provide IDR givebacks up to $100 million annually through 2019 which provides downside protection for LP unitholders.

DJ Basin expansion

DPM will construct a new 200 MMcf/d cryogenic natural gas processing plant (Mewbourn 3) in the DJ Basin, its tenth plant in the basin, projected to be in service by the end of 2018. Additionally, DCP collaborated with several key producers to form a cooperative development plan which provides a framework to add another 200 MMcf/d plant by mid-2019. Together, these projects will increase capacity by 50% to 1.2 billion cubic feet per day. DPM will also complete the next phase of its Grand Parkway low pressure gathering project and associated compression expansions by the end of 2018.

DPM is in the process of constructing additional field compression and plant bypass infrastructure that will add approximately 40 MMcf/d of incremental capacity during the summer of 2017. The new plants will connect to the Front Range Pipeline, one-third owned by DPM, for NGL takeaway to Mont Belvieu, Texas. Total capital investment for the plant and associated gathering is expected to be up to $395 million.

Sand Hills Pipeline expansion

DPM will expand NGL takeaway capacity on Sand Hills Pipeline by 30%, or 85,000 barrels per day (b/d) to 365,000 b/d, through the addition of four pump stations and a pipeline loop (Sand Hills expansion) to meet NGL production growth from owned and third party plants in the Delaware Basin. Total capital investment for the Sand Hills expansion is approximately $70 million, with an expected in-service date in 4Q17. The newly combined DPM owns two-thirds interest in Sand Hills and Phillips 66 Partners owns the remaining one-third interest and each will fund their proportionate share of the expansion.

Sand Hills provides NGL takeaway capacity to the Mont Belvieu market from both owned and third party plants in the Permian Basin.

BofA Merrill Lynch acted as financial advisor, Bracewell acted as legal counsel and Gibson, Dunn & Crutcher acted as special tax counsel to DCP Midstream, LLC. Evercore acted as financial advisor and Andrews Kurth Kenyon and Richards, Layton & Finger acted as legal counsel to the Conflicts Committee of DPM's Board of Directors.

Sendero Midstream to build gathering, processing system in Eddy County, NM

Sendero Midstream Partners LP, a privately held company owned by Energy Capital Partners, has secured long-term producer commitments and funding from Energy Capital Partners for the construction of a natural gas gathering and processing system located near the city of Carlsbad in Eddy County, New Mexico.

Sendero's facilities will consist of both low and high pressure gas gathering pipelines, a 130 MMcf/day cryogenic processing plant and a natural gas liquids takeaway pipeline. The newly constructed midstream assets are expected to begin operations in 3Q17.

Plains All American to acquire Permian gathering system for $1.2B

Plains All American Pipeline LP has entered into definitive agreements to acquire a Permian Basin crude oil gathering system for approximately $1.2 billion. PAA also announced it had entered into definitive sales agreements totaling $380 million, which includes two pending transactions aggregating approximately $310 million and the completion of a third transaction in January 2017 for approximately $70 million.

Permian Basin acquisition

Concho Resources Inc. and Frontier Midstream Solutions LLC entered into separate agreements with Plains All American Pipeline LP to sell 100% of their respective ownership interests of Alpha Holding Company LLC, the owner of the Alpha Crude Connector system (ACC).

In 2014, Concho and Frontier formed the ACC joint venture to construct a crude oil transportation system in the northern Delaware Basin. Concho owns 50% of the joint venture with an option to purchase Frontier's ownership interest at a predetermined multiple of invested capital. After adjusting for debt and working capital, Concho expects to receive net cash proceeds from the sale of approximately $800 million. As of December 31, 2016, Concho's net investment in ACC was approximately $130 million.

ACC, which is the first large-scale crude oil gathering system in the northern Delaware Basin, includes a 515-mile gathering system as well as crude oil storage facilities, truck terminals and multiple receipt points. The pipeline system became operational in late 2015, and at that time, Concho commenced a 10-year crude oil acreage dedication and transportation agreement. After the transaction's close, the dedication and transportation agreement will remain in place.

The acquisition and pending sale transactions are subject to customary closing conditions, including receipt of regulatory approvals, and are expected to close during the first half of 2017. Simmons & Company International, Energy Specialists of Piper Jaffray, served as exclusive financial advisor, and Vinson & Elkins served as legal advisor to Concho.

Asset sale, partnership

PAA also executed definitive agreements to sell two non-core assets for aggregate proceeds of approximately $310 million. Such transactions include the Bluewater gas storage facility in Michigan and a non-core pipeline segment located in the Midwestern US.

On January 18, 2017, PAA completed the sale of an undivided 40% interest in a segment of the Red River Pipeline to a subsidiary of Valero Energy Partners LP for approximately $70 million. The undivided interest conveyed represents 60,000 barrels per day on the segment of the pipeline extending from Cushing, Oklahoma to Hewitt, Oklahoma near Valero's refinery in Ardmore, Oklahoma. PAA retained an undivided 60% interest in the Hewitt Segment and a 100% interest in the remaining portion of the pipeline that extends from Ardmore to Longview, Texas, where it connects with various pipelines, including PAA's newly constructed Caddo pipeline that extends to refinery markets in Northern Louisiana.

NGL Energy Partners closes Murphy Energy asset deal

NGL Energy Partners LP has closed on the previously announced acquisition of certain assets of Murphy Energy Corp. The assets include the Port Hudson, Louisiana Terminal, which is a natural gas liquids terminal that supports refined products blending, and the Kingfisher, Oklahoma Facility, which is a natural gas liquids and condensate facility. The combined purchase price of the assets was approximately $51 million.

The Port Hudson Terminal is located near Baton Rouge, Louisiana, and is in proximity to other refined products infrastructure along the Colonial Pipeline. The terminal consists of four truck unloading bays and eight pressurized storage tanks with total capacity of 720,000 gallons. Cash flows are supported by long-term supply contracts.

The Kingfisher Facility is a natural gas liquids and condensate facility located in Kingfisher, Oklahoma and connects to the Chisholm NGL Pipeline and the Conway Fractionation complex. The facility has multiple truck unloading stations, 450,000 gallons of storage capacity, a methanol extraction tower and a 5,000-barrel per day condensate splitter. The facility is supplied by production from regional gas processing plants and producers. Crude oil from this facility is also expected to be delivered to Cushing via the Glass Mountain Pipeline extension into the STACK play. NGL Energy Partners LP is a 50% owner in Glass Mountain Pipeline.

Zenith Energy to market, develop midstream assets in mexico

Zenith Energy LP, an international liquids and bulk terminaling company, has signed an agreement with a company in Mexico to market and develop existing logistics assets for oil storage and distribution in Mexico. The agreement provides for the use of certain facilities in Mexico of CEMEX S.A.B. de C.V., a global building materials company. Zenith has been awarded the rights to develop these sites for fuel and LPG storage and distribution. CEMEX's facilities in Mexico include more than 90 storage and distribution locations, in both inland and coastal cities, most of them connected to the Mexican railroad network.

Plains All American to expand Permian Basin crude takeaway capacity

Plains All American Pipeline LP is expanding the capacity on its Cactus pipeline from McCamey to Gardendale, Texas to approximately 390,000 barrels per day. The expansion will allow PAA to move increasing production volumes from the Permian Basin to Corpus Christi and other delivery points along the system. The expansion includes manifold and metering enhancements at its origination station which are anticipated to be completed in the third quarter of 2017.

The Cactus pipeline is a 310-mile, 20-inch crude oil pipeline and is capable of transporting crude oil from the Permian Basin to the PAA/Enterprise Products Partners Eagle Ford Joint Venture (Eagle Ford JV) Pipeline. The Eagle Ford JV Pipeline has a capacity of 660,000 barrels per day and serves the Three Rivers and Corpus Christi markets directly and can supply the Houston-area market through a connection to the Enterprise South Texas Crude Oil Pipeline.