Crestwood Midstream Partners Expands Bakken Shale Footprint with $750 Million Acquisition of Arrow Midstream

Crestwood Midstream Partners Expands Bakken Shale Footprint with $750 Million
                        Acquisition of Arrow Midstream

Following Inergy merger, transaction positions Crestwood among the largest
full-service Bakken Shale midstream players

Visible growth from substantial producer crude oil development and synergies
with Crestwood's existing Bakken assets drives meaningful long-term accretion

Conference call to discuss transaction scheduled for October 10, 2013, at
11:00am ET

PR Newswire

HOUSTON, Oct. 10, 2013

HOUSTON, Oct. 10, 2013 /PRNewswire/ --Crestwood Midstream Partners LP (NYSE:
CMLP) ("Crestwood" or the "Partnership") today announced that its wholly-owned
subsidiary, Crestwood Arrow Acquisition LLC ("Crestwood Arrow"), has entered
into an agreement to acquire Arrow Midstream Holdings, LLC ("Arrow"), a
privately-held midstream company, for approximately $750 million, subject to
customary purchase price adjustments. The acquisition marks a continuation of
Crestwood's liquids-focused strategy by significantly expanding Crestwood's
operational footprint in the Bakken Shale and highlights the immediate
benefits of the merger of Crestwood and Inergy Midstream, which was completed
on Monday, October 7, 2013. The transaction is expected to be immediately
accretive to Crestwood's estimated distributable cash flow per limited partner
unit in 2014, with growing accretion thereafter based upon projected
production increases from the Arrow assets. The transaction is expected to
close in the fourth quarter of 2013.

Arrow, through its wholly-owned subsidiaries, owns and operates substantial
crude oil, natural gas and water gathering systems located on the Fort
Berthold Indian Reservation in the core of the Bakken Shale in McKenzie and
Dunn Counties, North Dakota. The system today consists of over 460 miles of
gathering pipeline including 150 miles of crude oil gathering pipeline, 160
miles of natural gas gathering pipeline, and 150 miles of water gathering
lines. Current volumes on the system are approximately 50,000 barrels per day
("Bbls/d") of crude oil, 15 million cubic feet per day ("MMcf/d") of rich
natural gas and 8,500 Bbls/d of water. Additionally, the acquired assets
include salt water disposal wells and a 23-acre central delivery point ("CDP")
with multiple pipeline take-away outlets and a fully-automated truck loading
facility.

The Arrow gathering systems are anchored by long-term, primarily fee-based,
gathering contracts with blue chip producers who have dedicated over 150,000
acres to Arrow including more than 1,000 potential drilling locations on the
acreage. The producer customers are all world-class shale developers who have
substantial development programs on the dedicated acreage and have identified
the Bakken Shale as a significant driver of their future production growth.
The contracts provide for fixed-fee gathering services with annual escalators
for crude, natural gas and water gathering services. There are currently eight
drilling rigs running in the area of dedication with additional rig activity
in areas immediately adjacent to the system.

The Arrow systems are located approximately 60 miles southeast of Crestwood's
COLT Hub ("COLT") crude rail and pipeline terminal, located in Williams
County, North Dakota, and have direct connectivity with COLT through the
Hiland and Tesoro crude oil pipeline systems. The COLT Hub is one of the
Bakken Shale's leading rail transportation avenues for East Coast and West
Coast markets with current COLT Hub rail loading capacity being expanded to
160,000 Bbls/d. Many of Crestwood's largest customers at COLT are also major
purchasers of crude oil at the Arrow CDP, and the direct connectivity between
Arrow and COLT provides significant opportunity for synergies and expanded
customer services. By utilizing its existing Bakken infrastructure, market
knowledge and midstream expertise across the value chain, Crestwood is
well-positioned to link growing crude supply from the Arrow system to market
demand at COLT, resulting in improved sales optionality and optimal pricing
for Arrow producers while increasing supply sourcing options as well as
overall demand and utilization for market customers at COLT. 

"We are very excited about the addition of the Arrow assets to Crestwood's
rapidly expanding crude services business and our Bakken Shale footprint,"
stated Robert G. Phillips, Chairman, President and Chief Executive Officer of
Crestwood's general partner. "We believe this transaction is a strong first
step in executing Crestwood's growth strategy following our recently closed
merger with Inergy. The Bakken Shale is a core area for our future growth, and
by extending our platform upstream of COLT, Crestwood will be expanding and
optimizing the full suite of liquids value chain services we can provide for
both our producer and demand-side customers. We are keenly focused on growing
our crude oil and NGL businesses. After the close of this transaction, we
will be one of the largest Bakken midstream service providers servicing
approximately 18% of current total Bakken crude oil production. Nationwide, we
will be handling over 470,000 Bbls/d of crude oil and NGLs in addition to over
2 billion cubic feet per day of natural gas through our gathering systems and
transportation assets."

Mr. Phillips added, "Because of the early integration efforts of Crestwood and
Inergy's commercial, operations and back-office teams in advance of the
merger, the addition of the Arrow assets and operations will effectively be
like a bolt-on acquisition. Additionally, our current operations at the nearby
COLT Hub provide a base of operations to quickly integrate Arrow into the
Crestwood operating model. We are very impressed with the operating platform
the Arrow team has established in the area and are excited to transition the
organization into the Crestwood family. Like Crestwood, the Arrow operational
and commercial staff is committed to safe and reliable operations, first-class
customer service, and active involvement and support for the communities and
environments in which we operate. Importantly, Arrow has established a great
local operating relationship with the Mandan, Hidatsa & Arikara Nation ("MHA")
and Crestwood is committed to maintaining and nurturing the MHA relationship
as we jointly work to expand the systems, benefitting both producers and
royalty owners in the area. The opportunity around our Bakken Shale position
is significant, and we are very excited to shift our focus from the merger and
the Arrow acquisition to the execution of our growth strategy across the
midstream value chain."

The Arrow system is currently undergoing an extensive expansion of its gas
gathering capacity to capture current flared natural gas volumes. These
enhancement projects, including line looping and system compression, are
expected to be substantially complete in the fourth quarter of 2013.
Thereafter, the systems will be primarily built-out with modest organic
capital requirements of approximately $80 million over the next 18 to 24
months to reach targeted operational throughput capacities of 125,000 Bbls/d
of crude oil, 100 MMcf/d of natural gas, and 40,000 Bbls/d of water.

Citi acted as exclusive financial advisor to Crestwood. In connection with the
transaction, Crestwood has secured fully-committed debt financing from Citi
Global Markets Inc. and fully-committed equity financing in the form of equity
consideration paid directly to the seller as well as additional equity
financing from undisclosed accredited investors.There are nofinancing
contingencies to close the transaction.

Conference Call

Crestwood's management team will hold a conference call with an accompanying
slide presentation to review this transaction on Thursday, October 10 at 11:00
a.m. Eastern Time (10:00 a.m. Central Time). To participate in the call, dial
888-549-7880 and ask for the Crestwood Midstream Partners conference call.
The slide presentation can be viewed and downloaded by going to the Investor
Relations section of the Company's website at http://www.crestwoodlp.com. The
call will also be webcast live over the Internet and can be accessed from
Crestwood's website, and an archive will be available shortly after the call.
A telephone replay will be accessible through October 17, 2013, by dialing
800-406-7325 and entering the passcode 4645313.



About Crestwood Midstream Partners LP

Houston, Texas, based Crestwood Midstream (NYSE: CMLP) is a master limited
partnership that owns and operates midstream businesses in multiple
unconventional shale resource plays across the United States. Crestwood
Midstream is engaged in the gathering, processing, treating and compression of
natural gas; transportation and storage of natural gas; transportation,
fractionation, storage, and terminalling of NGLs; and storage and terminalling
of crude oil. Prior to the merger of Crestwood Midstream Partners LP into
Inergy Midstream, L.P., which was completed on October 7, 2013, the
partnership was named Inergy Midstream, L.P. and was traded on the New York
Stock Exchange under the ticker symbol "NRGM." For more information about
Crestwood, visit www.crestwoodlp.com.

About Crestwood Equity Partners LP

Houston, Texas, based Crestwood Equity (NYSE: CEQP) is a master limited
partnership that owns the general partner interest (including the incentive
distribution rights) and an approximate 4% limited partner interest of
Crestwood Midstream. In addition, Crestwood Equity's operations include a
natural gas storage business in Texas and an NGL and crude oil supply and
logistics business that serves customers in the United States and Canada.
Prior to the merger of Crestwood Midstream Partners LP into Inergy Midstream,
L.P., which was completed on October 7, 2013, Crestwood Equity Partners LP was
named Inergy, L.P. and was traded on the New York Stock Exchange under the
ticker symbol "NRGY."

Forward Looking Statements

The statements in this communication regarding future events, occurrences,
circumstances, activities, performance, outcomes and results are
forward-looking statements. Although these statements reflect the current
views, assumptions and expectations of Crestwood Midstream and Crestwood
Equity management, the matters addressed herein are subject to numerous risks
and uncertainties which could cause actual activities, performance, outcomes
and results to differ materially from those indicated. Such forward-looking
statements include, but are not limited to, statements about the future
financial and operating results, objectives, expectations and intentions and
other statements that are not historical facts. Factors that could result in
such differences or otherwise materially affect Crestwood Midstream's or
Crestwood Equity's financial condition, results of operations and cash flows
include, without limitation, the risks that the Crestwood Midstream and
Crestwood Equity businesses will not be integrated successfully or may take
longer than anticipated; the possibility that expected synergies will not be
realized, or will not be realized within the expected timeframe; fluctuations
in oil, natural gas and NGL prices; the extent and success of drilling
efforts, as well as the extent and quality of natural gas volumes produced
within proximity of Crestwood Midstream or Crestwood Equity assets; failure or
delays by customers in achieving expected production in their natural gas
projects; competitive conditions in the industry and their impact on the
ability of Crestwood Midstream or Crestwood Equity to connect natural gas
supplies to Crestwood Midstream or Crestwood Equity gathering and processing
assets or systems; actions or inactions taken or non-performance by third
parties, including suppliers, contractors, operators, processors, transporters
and customers; the ability of Crestwood Midstream or Crestwood Equity to
consummate acquisitions, successfully integrate the acquired businesses,
realize any cost savings and other synergies from any acquisition; changes in
the availability and cost of capital; operating hazards, natural disasters,
weather-related delays, casualty losses and other matters beyond Crestwood
Midstream or Crestwood Equity's control; timely receipt of necessary
government approvals and permits, the ability of Crestwood Midstream or
Crestwood Equity to control the costs of construction, including costs of
materials, labor and right-of-way and other factors that may impact either
company's ability to complete projects within budget and on schedule; the
effects of existing and future laws and governmental regulations, including
environmental and climate change requirements; the effects of existing and
future litigation; and risks related to the substantial indebtedness of either
company, as well as other factors disclosed in Crestwood Midstream and
Crestwood Equity's filings with the U.S. Securities and Exchange Commission.
You should read filings made by Crestwood Midstream and Crestwood Equity with
the U.S. Securities and Exchange Commission, including Annual Reports on Form
10-K for the year ended December 31, 2012 and September 30, 2012,
respectively, and the most recent Quarterly Reports and Current Reports, for a
more extensive list of factors that could affect results. Crestwood Midstream
and Crestwood Equity do not assume any obligation to update these
forward-looking statements.

CONTACTS

Crestwood
Mark Stockard
832-519-2207
mstockard@crestwoodlp.com

SOURCE Crestwood Midstream Partners LP; Crestwood Equity Partners LP

Website: http://www.crestwoodlp.com
 
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