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QEP Midstream Closes $230M Green River Processing Deal

Zacks Equity Research

Midstream assets operator, QEP Midstream Partners, LP (QEPM) announced that it has completed the acquisition of 40% stake in Green River Processing LLC from QEP Field Services Company, a subsidiary of QEP Resources Inc. (QEP). The transaction involved a cash consideration of $230 million and is effective from Jul 1. This marks the first acquisition for the partnership post its Initial Public Offering (IPO) that took place in August last year.

QEP Midstream Partners stated that this transaction is expected to be immediately accretive to its distributable cash flow. The partnership also added that it has used available cash as well as funds from its $500 million credit facility to finance this acquisition.

Green River Processing is the owner of the Blacks Fork natural gas processing complex and the Emigrant Trail natural gas processing plant. The assets under sale comprise four natural gas processing plants that connect to six interstate natural gas pipelines and have a direct access to the NGL markets at Mt. Belvieu and Conway. These plants have a total natural gas processing capacity of 890 million cubic feet (MMcf) per day and fractionation capacity of 15,000 barrels of natural gas liquid per day.

QEP Midstream Partners was spun off from QEP Resources and works toward owing and developing midstream assets. The partnership provides natural gas and crude oil gathering and processing services and has assets located in the Green River Basin, the Uinta Basin and the Williston Basin.

QEP Midstream Partners currently has a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. market in the next one to three months.

Meanwhile, one can consider better-ranked players from the oil production and pipeline industry such as Holly Energy Partners L.P (HEP) and Pembina Pipeline Corporation (PBA). Both these stocks sport a Zacks Rank #1 (Strong Buy).

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