A limited liability company of Anadarko Petroleum Corporation APC, Magellan Midstream Partners, L.P. MMP and Plains All American Pipeline, L.P. PAA – Saddlehorn Pipeline Company, LLC – announced the extension of the Saddlehorn Pipeline system from Platteville to Carr, CO.

Saddlehorn Pipeline Company was an initiative of Magellan Midstream and Plains All American, with Anadarko Petroleum joining in Mar 2015, after it decided to exercise an option provided by the two former companies.

This pipeline company was formed to construct, own and operate the 550-mile Saddlehorn Pipeline (now 600 miles) to carry oil of different grades from the resource plays in the DJ Basin and Rocky Mountain area to storage facilities in Cushing, OK. With an initial capacity of around 200,000 barrels per day (bpd), this 20-inch pipeline is projected to have an ultimate capacity of transporting up to 400,000 bpd of oil from Platteville to Cushing.

The extension is intended to provide flexibility to shippers and streamline access to the Saddlehorn Pipeline system. Expected to be constructed with a 16-inch diameter pipe, the 50-mile pipeline extension from the aforementioned location will provide a connection to existing crude oil assets in that region.

The Platteville to Carr extension has an estimated outlay of $80–$100 million. The Platteville to Cushing pipeline is expected to come online by mid-2016 and the extension to Carr is anticipated to be operational by the end of 2016, subject to necessary permits and approvals.

Anadarko’s Midstream Group was formed in 2005 to manage its expanding midstream business segment effectively. First-quarter 2015 revenues from the company’s midstream segment increased 45% year over year to $174 million. Expanding its midstream operations will provide Anadarko additional capacity for transporting its oil and NGL production besides offering an added revenue stream.

Anadarko Petroleum currently carries a Zacks Rank #3 (Hold). LRR Energy, L.P. LRE is a better-ranked stock in the oil and gas space, sporting a Zacks Rank #1 (Strong Buy).

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