Rose Rock & Its Partners to Start White Cliffs Pipeline Expansion

Zacks

White Cliffs Pipeline, L.L.C. ("WCPL"), 51% owned by Rose Rock Midstream, L.P. (RRMS), announced that it will commence the commissioning of the expansion of the White Cliffs Pipeline. The expansion project associated with the looping of the existing operations is expected to start from Jul 2014 and will be operational by Aug 2014.

The 527-mile, 12-inch diameter common-carrier crude oil and condensate pipeline, White Cliffs Pipeline, transports production from the Denver Julesburg (:DJ) Basin and the Mid-Continent region to the Cushing interchange. The pipeline originates in Platteville, CO and terminates at Rose Rock Midstream’s storage facility in Cushing, Oklahoma.

Apart from Rose Rock Midstream, other interest owners include Plains All American Pipeline, L.P. (PAA), Western Gas Partners LP (WES) and Noble Energy, Inc. (NBL).

Upon completion of the expansion project, White Cliffs Pipeline’s transportation capability will increase to around 150,000 barrels per day (:BPD) from the existing level of 76,000 BPD. In addition, Rose Rock Midstream will continue to operate the White Cliffs Pipeline. The pipeline expansion will enable White Cliffs Pipeline to meet the increasing midstream service demand.

In 2013, Rose Rock Midstream acquired additional interest in White Cliffs Pipeline from SemGroup Corporation (SEMG). In first-quarter 2014, the acquisition of White Cliffs Pipeline provided $13.6 million as cash distributions to Rose Rock Midstream. We believe that the expansion of the White Cliffs Pipeline will provide more cash inflow to the partnership in the future through winning of more contracts from the upstream players.

Rose Rock Midstream maintained a stable cash generation capacity. In the first three months of 2014, the partnership’s operating cash flow increased to $18.4 million from $9.9 million in the prior-year comparable period. As of Mar 31, 2014, Rose Rock Midstream had total liquidity of $301 million, including $298 million available under revolving credit facilities and cash balance of around $3 million. A favorable liquidity position supports Rose Rock Midstream’s systematic investment in growth projects.

Rose Rock Midstream currently has a Zacks Rank #2 (Buy).

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