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Company makes $750 million play for assets in Bakken Shale

Crestwood Midstream Partners has taken a major step to meeting its goal of owning assets in the core areas of the major U.S. shale plays. The Houston-based midstream developer has acquired Arrow Midstream and its oil, gas and water gathering facility for roughly $750 million. The purchase will provide many benefits to the company, according to Robert Phillips, president and CEO of the company.

One of the main benefits, Phillips explained in a conference call regarding the acquisition, will be Crestwood’s ability to supply its COLT hub rail facility near Epping, N.D., with oil gathered from the Arrow facility.

The Arrow facility is located on the Fort Berthold Indian Reservation and consists of 150 miles of crude oil gathering pipeline, 160 miles of natural gas gathering pipeline and 150 miles of water gathering lines. The facility can currently handle 50,000 barrels of crude per day, 15 million cubic feet of gas per day and 8,500 barrels of water per day. The facility also includes multiple pipeline takeaway points, salt water disposal wells and a truck loading facility. The facility is in the midst of an expansion program as well to increase gas gathering capabilities to capture flared gas. The expansion includes line looping and system compression upgrades.

“The Bakken Shale is a core area for our future growth, and by extending our platform upstream of COLT, Crestwood will be expanding and optimizing the full suite of liquids value chain services we can provide for both our producer and demand-side customers,” Phillips said. The facility purchase has made Crestwood one of the largest midstream service providers in the Bakken as it now serves 18 percent of current Bakken crude production.

Crestwood made the purchase with a mix of equity and debt financing. Citi Global Markets Inc. provided the debt financing for the purchase. “If you look where our assets are we truly believe we are in the core of the core,” Will Moore, senior vice president of strategy and corporate development, said, regarding the purchase. According to Moore, the company performed extensive research regarding the production potential around both the COLT and Arrow facilities. “We feel very good about the long term production of the Bakken,” he said. “I can tell you that actual [production] has outstripped every production estimate that we looked at.”

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