The recently announced combination of DCP Midstream LLC and DCP Midstream Partners LP creates the nation’s largest natural gas processor and natural gas liquids producer at what may be a particularly opportune time. The newly formed DCP Midstream LP, operating as a master limited partnership, owns 61 gas processing plants with a combined capacity of 7.8 Bcf/d—enough to process more than 10% of current U.S. production—as well as 12 fractionation plants, 59,700 miles of gas gathering pipelines and 4,600 miles of NGL pipelines. Better yet, many of these assets serve some of the U.S.’s most prolific and promising production areas, including the Midland and Delaware basins within the Permian; the Denver-Julesburg (DJ); and the side-by-side SCOOP and STACK plays. In today’s blog, we review the combined entity’s assets and prospects for growth in what soon may be happier times for NGL processors.
DCP Midstream LLC (a 50/50 joint venture (JV) of Phillips 66 and Spectra Energy, the latter of which plans to merge with Enbridge later in the first quarter of 2017) and DCP Midstream Partners LP (a master limited partnership, or MLP) announced on January 4, 2017 that they have signed and closed a deal that transfers all the assets and debt of DCP Midstream LLC (which we’ll refer to as “the LLC”) into DCP Midstream Partners LP (which we’ll call “Partners”). Partners, the MLP––whose assets and outlook we discussed in detail last year in our Spotlight Report, We Get Back Up Again (a Backstage Pass subscriber-only analysis, provided through our partnership with East Daley Capital, we provide as a free bonus to all of our blog readers today; see how to download below) —on January 23 will be renamed DCP Midstream LP. Phillips 66 and Spectra share a 38% ownership interest in the newly expanded MLP (the balance is owned by public unitholders).