DCP Midstream Partners acquires joint venture

DCP Midstream Partners (DPM) acquired the assets of DCP Midstream LLC, a joint venture between Phillips 66 and Spectra Energy Corp., becoming the largest natural gas liquids (NGL) producer and gas processor in the United States, the companies announced.

On Jan. 23, the combined company, with a value of $11 billion, will be renamed DCP Midstream LP.

Under terms of the transaction, DCP Midstream will pay DPM $424 million in cash and get 31.1 million DPM units. DPM will also assume $3.15 billion of DCP Midstream’s debt.

“This transformational transaction provides a platform of premier assets with strong growth opportunities in the key U.S. producing basins at a multiple that paves the way toward future distribution growth,” says Wouter van Kempen, chairman, president and CEO of both DCP Midstream and DCP Midstream Partners.

Van Kempen says the transaction will offer its unitholders and owners a simplified structure, and it will reset the overall cost structure of the DCP enterprise to make the assets more MLP friendly.

The merger will allow for the company to expand, starting with a 200-million-cu.-ft.-per-day processing plant at Colorado’s Denver-Julesburg basin that is expected to be completed by late 2018, van Kempen says. In addition, the company plans to expand its Sand Hills NGL pipeline to its full 365,000 barrels per day of capacity by the end of 2017.