By Matt Whittaker / NewsBreak Denver
(Denver, Colo.) On Tuesday, natural gas company DCP Midstream said it agreed to buy gathering and processing assets in Texas for $160 million in the latest fossil fuel deal involving a Denver-based company.
DCP Midstream, headquartered in the southeastern neighborhood of Southmoor Park, will use cash and debt to buy the operations from a Houston-based private equity firm in a deal expected to close in the third quarter.
The system of natural gas gathering and processing assets in the Permian Basin area of western Texas is near part of DCP Midstream’s pipeline system. The Denver company is one of the nation’s largest natural gas liquids producers and marketers and natural gas processors. DCP Midstream’s pipeline system stretches through New Mexico, Texas, Louisiana, Oklahoma, Kansas and Colorado.
"We are very pleased to announce the agreement to expand our Permian gathering and processing business with assets that have connectivity to DCP’s existing infrastructure and fit our long-term strategy of securing incremental volumes for our downstream assets," said DCP Midstream CEO Wouter van Kempen.
The acquisition comes after a bumper first quarter when DCP Midstream’s profit hit $80 million, up more than 50 percent from the first quarter last year. Higher natural gas and natural gas liquids prices helped boost earnings in the company’s gathering and processing division.
The DCP Midstream deal is part of a flurry of consolidation in the Denver-based fossil fuel industry amid higher prices for natural gas and oil, partly due to the Russia-Ukraine war roiling the global markets for those commodities.
Last month, Denver’s PDC Energy completed its acquisition of Great Western Petroleum, a privately held company based in Denver. Also, in May, Denver-headquartered Centennial Resource Development said it would combine with Colgate Energy Partners III of Midland, Texas. And in March, Denver’s Whiting Petroleum Corp. said it would merge with Houston-based Oasis Petroleum.
The companies expect the Centennial and Whiting deals to close in the second half of the year.