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Vaquero Midstream to expand Southern Delaware Basin processing capacity

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World Pipelines,

Vaquero Midstream announced an agreement with its bank group to increase their revolving line of credit from US$40 million - 95 million. The increased bank capacity will be used to support the construction of a second 200 million ft3/d cryogenic processing plant at the existing Caymus plant site located in Pecos County of the Southern Delaware Basin.

Vaquero's 30 in. and 24 in. Lariat rich-gas gathering header transverses northwest from the Caymus facility near Waha through the heart of some of the highest GOR (Gas-Oil Ratio) production in the Southern Delaware Basin. Over 70 rigs are currently active within 10 miles of Vaquero's gathering line. This drilling activity is driving volume growth for current customers as well as other potential new customers near the Vaquero rich-gas gathering header.

Upon completion of Caymus II plant construction, Vaquero will have 400 million ft3/d of processing capacity in service at the site, with further expansion capability to over 1 billion ft3/d Construction is estimated to be complete in the first quarter of 2018.

"We are pleased to see the confidence our bank group has shown in the quality of our producer customers and their drilling plans," stated William Davis, Principal. "Our expectation is that this expansion and future projects should be financed with no additional equity capital, due to the level of cash flow we anticipate."

In addition to the more than a dozen markets currently available to its producer customers through connections at the WAHA Hub, Vaquero is constructing an additional interconnect to the Roadrunner gas transmission pipeline taking gas into Mexico. This interconnect will supply the needs of the CFE and other Mexican market demand. Producers on Vaquero's system have seen the advantages of the liquidity of the WAHA market versus the constraints often encountered in other parts of the Basin.

"We expect to need the second plant's capacity to handle our current customers' growing gas volumes by the end of the first quarter of 2018," said Gary Conway, CEO. "By initiating construction now, we are able to ensure that our producers will have capacity for processing gas volumes in our system next year."

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