Crestwood to Build $180 Million Gas Gathering System in Texas

Crestwood Equity Partners LP, September 29, 2016

Crestwood Equity Partners LP (“Crestwood”) has announced that it has entered into a long-term agreement with SWEPI LP (“SWEPI”), a subsidiary of Royal Dutch Shell plc, to construct, own and operate a natural gas gathering system in Shell’s operated position in the Permian - Delaware Basin. The system will be owned through Crestwood’s previously announced joint venture with First Reserve, Crestwood’s indirect general partner and largest unitholder, which was formed to finance and own midstream infrastructure in the Delaware Basin. Crestwood estimates the full build-out of the gas gathering system will cost approximately $180 million. Project development activities are underway with a targeted initial in-service date on or before July 1, 2017.

SWEPI will provide Crestwood with a dedication of approximately 100,000 acres and gathering rights for SWEPI gas production across a large acreage position in Loving, Reeves andWard counties, Texas. The initial gathering system is designed for gas production of approximately 250 million cubic feet per day and will include 194 miles of low pressure gathering lines, 36 miles of high pressure trunklines, and centralized compression facilities which are expandable over time as production increases. Crestwood will provide gathering, dehydration, compression and liquids handling services on a fixed fee basis. Additionally, Shell has the option to purchase up to a 50 percent equity interest in the system prior toSeptember 1, 2017.

Robert G. Phillips, Chairman, President and Chief Executive Officer of Crestwood’s general partner, stated, “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. 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.

Mr. Phillips continued, “Importantly, the Delaware Basin joint venture with First Reserve will provide Crestwood with additional financial flexibility to invest in this great 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 3-stream gathering system in Reeves, Loving, & Culberson counties, Texas which remains under exclusivity with an anchor shipper.


About Crestwood Equity Partners LP

Houston, Texas, based Crestwood Equity Partners LP is a master limited partnership that owns and operates midstream businesses in multiple unconventional shale resource plays across the United States. Crestwood Equity is engaged in the gathering, processing, treating, compression, storage and transportation of natural gas; storage, transportation, terminalling, and marketing of NGLs; and gathering, storage, terminalling and marketing of crude oil.


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