Concho, Frontier Midstream Target Moving More Oil Volumes from Permian Midland

Permian Basin pure-play Concho Resources Inc. and Frontier Midstreams Solutions IV LLC have partnered to build a crude gathering, transportation and storage system in the northern part of the Midland sub-basin to support growth in the region.

Beta Crude Connector LLC (BCC), to be owned 50-50, is to consist of a 100-mile gathering system, 250,000 bbl of storage and truck terminals. The pipeline system is to initially have the capacity to deliver 150,000 b/d multiple delivery points. Initial flows are targeted by mid-year. BCC is Frontier’s second joint venture with Concho.

“Through the joint venture, we will leverage Frontier’s midstream expertise and enhance the value of our high-quality footprint in the Midland Basin with a reliable, cost-efficient gathering and transportation solution,” said Concho President Jack Harper. “Importantly, this is a compelling investment opportunity that we can make with no changes to our capital plans.”

Concho, one of the largest operators in the Permian, has been working to fold in assets it acquired after taking over RSP Permian Inc. last year in a $9.5 billion acquisition. Plans are to increase oil production by 26-30% and total production 21-25% in 2019. The company expects 1Q2019 production to average 300,000-306,000 boe/d.

The Midland, TX-based independent reported production of 307,097 boe/d in 4Q2018, a 45% increase from the year-ago quarter and 7% higher sequentially. Oil production averaged 198,957 b/d in 4Q2018, a 53% increase year/year and up 8% sequentially, while natural gas production averaged 648.8 MMcf/d, up 33%.

BCC plans to file with the Federal Energy Regulatory Commission to operate as a common carrier pipeline. Concho also agreed to enter into a long-term acreage dedication agreement.

Tulsa-based Frontier Midstream is owned by Frontier Energy Partners II LLC and funds of Energy Spectrum Capital, a Dallas-based private equity that pursues opportunities in North America’s midstream sector.