Tallgrass Energy Partners, LP’s subsidiary Tallgrass Midstream, LLC (TMID) has closed on the acquisition of Outrigger Energy LLC’s crude oil gathering system in the Powder River Basin for approximately $36 million, subject to potential adjustments specified in the purchase agreement. The acquired assets include approximately 34 miles of gathering lines and approximately 150,000 acres dedicated on a long-term fee-based contract. Tallgrass estimates approximately $7 million in additional capital expenditures for the remainder of 2017 on the Outrigger system.
As a result of the acquisition, Tallgrass Interstate Gas Transmission, LLC (TIGT) intends to abandon by sale to TMID an underutilized segment of its system from Labonte, Wyo., to Guernsey, Wyo. The abandonment, which is subject to approval by the Federal Energy Regulatory Commission, will have no adverse effect on TIGT’s firm transportation customers.
TMID intends to convert the acquired pipeline segment from TIGT into crude oil service and also construct the necessary facilities to establish a new crude oil line from Labonte to the Outrigger system along with additional laterals into other producing areas in the Powder River Basin. This project will provide direct access for producers on the Outrigger system to Tallgrass Pony Express Pipeline, LLC’s crude oil pipeline system.
“This is another strategic acquisition that complements our existing processing, natural gas gathering, transportation and water assets in the region and enables us to provide additional services for producers in the basin,” said Tallgrass Chief Operating Officer Bill Moler. “With the early, but very encouraging, well results from producers, the Powder River Basin is a strategic focus for Tallgrass. This acquisition expands our footprint in the region and provides another direct supply source for Pony Express.”