Crestwood Midstream Partners completes acquisition of Arrow Midstream Gathering System

Crestwood Midstram Partners LP and the owner of its general partner, Crestwood Equity Partners LP, has announced this week that Crestwood has completed the previously announced acquisition of Arrow Midstream Holdings, LLC (Arrow), a privately-held midstream company, for approximately US$ 750 million.

Strategic acquisition

“We are pleased to complete this strategic acquisition in the core of the Bakken Shale,” states Robert G. Phillips, Chairman, President and Chief Executive Officer of Crestwood’s general partner. “The Arrow transaction demonstrates the execution of our growth strategy in liquids-focused shale plays, where we can utilise existing assets to provide additional services to our customers and enhance returns for our investors. The larger scale of the combined Crestwood partnership also enables us to efficiently finance the acquisition with an appropriate blend of long-term debt and equity financing sources,” added Phillips.

Arrow owns and operates approximately 460 miles of gathering pipeline composed of 150 miles of crude oil gathering pipeline, 160 miles of natural gas gathering pipeline and 150 miles of water gathering lines. Current volumes on the system are approximately 50 000 bpd of crude oil, 15 million m³/d of rich natural gas. The Arrow gathering systems are anchored by long-term, primarily fee-based gathering contracts and more than 150 000 net acres of dedication from area producers including WPX Energy, QEP Resources and Kodiak Oil & Gas Corp, among others.

Expanding gathering capacities

There are currently nine drilling rigs running in the area of dedication with additional rig activity in areas immediately adjacent to the Arrow systems. This area is estimated to have more than 1000 potential drilling locations providing the potential for significant long-term production growth. The Arrow systems are currently being expanded to increase gathering capacities to 125 000 bpd of crude oil, 100 million m³/d of natural gas, and 40 000 bpd of produced water. The cost of these expansions will total approximately US$ 80 million over the next 18 - 24 months. Crestwood expects to complete in the fourth quarter 2013 an initial phase of this expansion designed to gather natural gas currently being flared.

The Arrow systems are located approximately 60 miles southeast of Crestwood's COLT Hub, a crude rail and pipeline terminal located in Williams County, North Dakota. The COLT Hub is one of the Bakken Shale's leading rail transportation avenues for East Coast and West Coast markets. The Arrow systems have connectivity with the COLT Hub through the Hiland and Tesoro crude oil pipeline systems and positions Crestwood with significant opportunity for synergies and expanded customer services resulting from the acquisition. Crestwood is one of the largest Bakken midstream service providers servicing approximately 18% of current total Bakken crude oil production. Nationwide, Crestwood handles more than 470,000 bpd of crude oil and natural gas liquids and more than 2 billion m³/d of natural gas through its gathering systems and transportation assets.

Adapted from press release by Hannah Priestley-Eaton

Read the article online at: https://www.worldpipelines.com/business-news/12112013/crestwood_midstream_partners_completes_acquisition_of_arrow_midstream_gathering_system/