In this article, we’ll look at Crestwood Equity Partners’ (CEQP) growth plans for the remainder of 2016 and 2017. Before that, let’s look at its YTD (year-to-date) market performance.
Crestwood Equity Partners rose ~6.0% in two trading sessions following its 3Q16 earnings announcement. CEQP has fallen 3.8% since the beginning of 2016. At the same time, the Alerian MLP ETF (AMLP), which comprises 26 midstream energy MLPs, has fallen 0.9%. CEQP’s peers DCP Midstream Partners (DPM) and Western Gas Partners (WES) have risen 32.1% and 16.1%, respectively, in 2016.
Crestwood Equity Partners recently announced a long-term gas-gathering agreement with SWEPI, a subsidiary of Royal Dutch Shell, in the Delaware Permian Basin. The gathering system will include 230 miles of low- and high-pressure gathering pipelines. Crestwood Equity has 100,000 acres dedicated under the 20-year contract.
The partnership has also entered into “exclusivity and reimbursement agreements” with some shippers along its planned Reeves County gathering (or RIGS) system. Crestwood Equity is expecting final project approvals in 4Q16.
Crestwood and its sponsor, First Reserve, formed a 50-50 joint venture to pursue expansion opportunities in the Delaware Permian Basin. Both CEQP and First Reserve have committed $250 million of initial capital to fund SWEPI and the RIGS system.
According to Robert G. Phillips, CEQP’s CEO, “For 2017, we are committed to maintaining significant coverage on our distributions and a strong balance sheet as we execute on announced projects and finalize others in the growing opportunity set around our operating footprints in the Delaware Permian, Bakken and Marcellus regions.”