DCP MIDSTREAM ANNOUNCES DISTRIBUTION, CAPITAL, AND COST REDUCTIONS

DENVER, March 23, 2020 (GLOBE NEWSWIRE) -- Today, in response to extraordinary and volatile market conditions, DCP Midstream, LP (NYSE: DCP) announced the following decisive actions.

First, the board of directors of its general partner approved a plan to reduce quarterly distributions to its common unitholders to $0.39 per unit or $1.56 annually, beginning with the first quarter 2020 distribution, payable in May 2020. This 50% distribution reduction results in $325 million of cash that will be fully utilized to reduce leverage and strengthen the balance sheet.

Second, DCP will reduce its 2020 growth capital program by 75%, to approximately $150 million for the year, down from a guidance midpoint of $600 million. This remaining capital spend is required for necessary and strategic projects that are already underway. The $450 million growth capital reduction includes the strategic decision to defer a 30% ownership option in Phillips 66’s Sweeny Frac 2 and 3 projects, which was projected to be exercised at the end of 2020. Although DCP does not expect to exercise the option in 2020, Phillips 66 and DCP are considering an option in later years that would be mutually beneficial for both companies. Additional growth capital reductions have been made on a basin-specific basis. Looking to 2021, DCP has provided a growth capital range of $50 million to $150 million and the company anticipates targeting the low end of the range.

Third, through targeted cost and sustaining capital reductions, DCP expects to minimize the negative impact of the commodity price environment by approximately $80 to $100 million in 2020. To achieve this goal, DCP plans to lower costs by at least $50 million enterprise-wide, reduce sustaining capital by $30 million, and further drive DCP 2.0 innovation efforts by up to $20 million to improve cash flows.

DCP remains focused on the health and safety of its people, customers, vendors, and communities as the company’s top priority during the COVID-19 outbreak. DCP has implemented pandemic response and business continuity plans to prevent illness and provide reliable and safe operations, while maintaining regular communication with customers.

“In response to current unprecedented market conditions, DCP has taken aggressive action to optimize over $850 million in cash flows to improve our leverage and liquidity, and position the company for long-term success.” said Wouter van Kempen, chairman, president, and CEO of DCP Midstream. “The decision to reduce our distribution was not taken lightly, but with a focus on long-term value creation, we believe it is in the best interest of our unitholders, employees, and the company. Our business remains strong, with no disruptions in operations, and these decisive actions will enable DCP to maintain and strengthen our balance sheet and continue to serve our customers well.”