Crestwood, SWEPI Sign Gathering Agreement for Permian-Delaware
Delaware Basin. The system will be owned through Crestwood’s joint venture with First Reserve, an indirect general partner and largest unit holder, which was formed to finance and own midstream infrastructure in the Delaware
Basin. Crestwood estimates the full buildout of the gas gathering system will cost about $180 million. Project development activities are under way with a targeted in-service date on or before July 1, 2017.
SWEPI will provide Crestwood with a dedication of about 100,000 acres and gathering rights for gas production across a large acreage position in Loving, Reeves, and Ward counties, Texas. The initial gathering system is designed for gas production of about 250 MMcfd and will include 194 miles of low-pressure gathering lines, 36 miles of high-pressure trunk lines, and centralized compression facilities designed to be expandable as production
increases. Crestwood will provide gathering, dehydration, compression, and liquids handling services on a fixed-fee basis. In addition, Shell has the option to purchase up to a 50% equity interest in the system prior to Sept. 1, 2017.
“We are pleased to enter into this important, long-term gathering agreement with SWEPI in the prolific Permian Basin where Shell has been developing its premier Delaware Basin acreage position since 2012,” said Robert G. Phillips, chairman, president, and CEO of Crestwood’s general partner. “This agreement demonstrates Crestwood’s strong operating track record in the Marcellus, Bakken, Barnett, and Delaware basins and our leading commitment
to customer service, safe and reliable operations, and environmental stewardship.”
Phillips added that the Delaware Basin joint project with First Reserve will provide Crestwood with additional financial flexibility to invest in the long-term growth project while maintaining a disciplined balance sheet and strong distribution coverage. “With the financial structure from our joint venture and the targeted in-service date for the new natural gas gathering system, we expect the investment will be accretive to Crestwood as early as late 2017
and, in any event, fully accretive to Crestwood in 2018. Additionally, with First Reserve’s support and incremental capital commitment to the joint venture, Crestwood is very well-positioned financially to execute on the SWEPI
opportunity and other midstream opportunities in the Delaware Basin, including the previously announced threestream gathering system in Reeves, Loving, and Culberson counties, Texas, which remains exclusively with an anchor
shipper.”
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