JP Energy Partners LP announced that it has signed a 10 year fee-based gathering agreement with Discovery Natural Resources LLC (Discovery) to construct and operate an extension of its Silver Dollar Pipeline crude oil gathering system into the core of the Midland Basin. The agreement with Discovery is supported by a dedication of 53 000 acres in Reagan, Glasscock, Sterling and Irion Counties. In addition to pipeline gathering, JP Energy will also provide crude oil trucking, marketing and related services for Discovery.
“The Midland Basin is a key area of focus for JP Energy, and we believe that our Silver Dollar Pipeline is a strategic and well-positioned crude oil gathering system. We are excited to use the market knowledge we have gained through our existing operations in the Permian Basin and Eagle Ford to partner with Discovery and further expand our comprehensive crude oil midstream solution,” stated J. Patrick Barley, Chief Executive Officer of JP Energy.
“We expect that as Discovery and other producers continue to develop the Spraberry, Wolfberry and Wolfcamp plays of the Midland Basin, JP Energy’s locational advantages and broad range of logistical capabilities will prove valuable to both the producer community and downstream customers in the crude oil markets.”
The gathering system extension will consist of approximately 55 miles of pipeline, extending from southern Reagan County north into Glasscock County across some of the most prolific drilling areas of the Midland Basin. The project, with an estimated capital cost of approximately US$36 million, is expected to be completed in the second half of 2015. The project will be accretive to distributable cash flow per unit upon completion and will initially be funded using our revolving credit facility.
Adapted from press release by Hannah Priestley-Eaton