Regency Energy Partners LP, a pipeline owner controlled by Energy Transfer Equity LP, agreed to buy two pipeline units for about $1 billion to expand in Texas.
Regency will acquire the midstream assets of Eagle Rock Energy Partners LP for $200 million in stock and $520 million in cash, according to a statement today. Separately, Houston-based Regency said it would pay $290 million in cash and stock for assets belonging to closely held Hoover Energy Partners LP.
Oil production in the Permian Basin increased 16 percent from 2010 to 2012, according to the Railroad Commission of Texas. The Hoover lines extend into parts of the Permian Basin where producers forecast production will rise, Regency said.
The Eagle Rock deal will augment Regency’s $3.88 billion acquisition of PVR Partners LP, announced Oct. 10 and expected to close in March, Regency Chief Executive Officer Mike Bradley said in today’s statement.
“Our expanded footprint will strengthen Regency’s position as a midstream provider in the Mid-Continent region,” Bradley said in today’s statement.
The Eagle Rock deal is expected to close in the first half, as is the Hoover transaction.
Energy Transfer Equity will buy $400 million of Regency common units at today’s market price to help finance the Eagle Rock aquisition, Energy Transfer said today in a separate statement. Energy Transfer also announced a two-for-one stock split to be completed by Jan. 13 and $1 billion stock buyback.
Regency also intends to assume $550 million of Eagle Rock debt.
Regency is buying 8,100 miles (13,000 kilometers) of gathering lines in the Texas Panhandle, East Texas and South Texas from Eagle Rock as well as plants capable of processing 800 million cubic feet per day of natural gas. Hoover gathers and treats oil, natural gas and water in the southern portion of the Permian’s Delaware Basin in Texas.
Evercore Group LLC and Citigroup Inc. advised Eagle Rock. Barclays Plc’s investment banking unit advised Regency on the Eagle Rock transaction.
(Eagle Rock will hold a conference call to discuss the transaction at 10 a.m. New York time today, accessible on LIVE