DCP Midstream Partners Takes Top Role in Eagle Ford Shale in First-Quarter 2013, Expects $2.7 Billion of Growth in 2013-14

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Researched by Industrial Info Resources (Sugar Land)--DCP Midstream Partners LP (NYSE:DPM) (Denver, Colorado), a midstream master limited partnership in the natural gas and natural gas liquids (NGL) gathering, transportation and storage markets, reported solid profit gains in first-quarter 2013 as it expanded its interest in the Eagle Ford Shale and saw improved margins in its propane business. Net income for the partnership was reported to be $31 million, compared with $12 million in first-quarter 2012.

Total operating revenues were reported to be $731 million, a 12.66% decrease from the same period last year. The company's Natural Gas Services segment was affected by weaker volumes and commodity prices, although natural gas storage and pipeline unit margins were stronger. Unit margins also were stronger in the Wholesale Propane Logistics segment, which benefited from exports at the Chesapeake terminal in Virginia.

During the quarter, DCP Midstream Partners received an additional 47% interest in the DCP Eagle Ford Joint Venture, which was formed in November last year, via a dropdown from DCP Midstream LLC for $626 million. The partnership now has an 80% ownership interest in the Eagle Ford joint venture, including an 80% ownership interest in the 200 million-cubic-feet-per-day Goliad cryogenic natural gas processing plant, which is under construction. DCP Midstream Partners fully owns the 200 million-cubic-feet-per-day Eagle Plant, which began operations in March. Along with the five existing DCP Eagle Ford Joint Venture plants, the company expects to eventually see 1.2 billion cubic feet per day of processing capacity in the area.

DCP Midstream Partners is managed by its general partner, DCP Midstream GP, LP, which in turn is managed by its general partner, DCP Midstream GP, LLC, which is owned by DCP Midstream LLC, a joint venture between Spectra Energy (NYSE:SE) and Phillips 66 (NYSE:PSX).

Industrial Info is tracking more than $1 billion in active projects involving DCP Midstream LLC, including the $235 million construction of the 720-mile Sandhills Pipeline project in the Eagle Ford Shale. Part of the project involves installing the 132-mile middle section, which will transport up to 200,000 barrels per day (BBL/d) of NGLs from the Avalon Shale area in Reeves County, West Texas, to Mont Belvieu, Texas.

"The growth in dropdowns continues at an accelerating pace, and with the additional investment in the Eagle Ford, our strategy is playing out where [DCP Midstream Partners] is receiving some great assets and growth," said Bill Waldheim, the president of DCP Midstream Partners, in a conference call.

Since early 2011, DCP Midstream Partners has completed $2.5 billion of growth, executives say, and the company is expected to see about $2.7 billion of growth in 2013-14. Waldheim also said that NGL growth projects are progressing, with the Texas Express joint venture pipeline and Marysville ethane storage expansion projects on time and on budget.

"Consolidation of the Eagle Ford Joint Venture into DCP Midstream Partners will continue to be a major source of growth in the coming years," Waldheim said in the conference call. "The Keathley Canyon pipeline project at our Discovery joint venture is also progressing, with an in-service target date of mid-2014. Additional reserves continue to be added to this project, with deepwater producers announcing success in and around this area.

At the Third Annual Niobrara Infrastructure Development Summit in March, sponsored by Information Forecast Incorporated (Woodland Hills, California), Tim Christensen, DCP Midstream LLC's managing director for the Rockies, told conference attendees that his company also plans to invest more than $1 billion during the 2011-15 period to build or expand natural gas and NGL processing facilities in the Niobrara Formation, which covers much of northern Colorado and some of southeastern Wyoming. For more details, see March 28, 2013, article - Niobrara Infrastructure Companies Work to Catch Up with Producers.

Visit Industrial Info's North American Oil and Gas Transmission Project Database for more information on the growing industry.

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