ETP, Regency to merge in $18-billion deal

Energy Transfer Partners LP (ETP) and Regency Energy Partners have agreed to merge in a unit-for-unit transaction, plus a one-time cash payment to Regency unit holders, valued at $18 billion, including the assumption of net debt and other liabilities of $6.8 billion.

The deal, expected to close in the second quarter, would make ETP the second-largest master limited partnership, with operations in all major producing areas of the US.

Approved by the companies' boards and conflicts committees, the merger entails that Regency unit holders receive 0.4066 ETP common unit and a cash payment of 32¢ for each common unit of Regency.

Combined operations

ETP and Regency say the merger will “create substantial cost savings, capital efficiencies,” consolidating complementary gathering and processing platforms in several regions, including the Eagle Ford shale and Permian basin (OGJ Online, Nov. 6, 2014; Nov. 18, 2014).

Natural gas volumes into ETP’s intrastate pipeline system as well as liquids volume for Lone Star—an NGL storage, fractionation, and transportation joint venture of the companies—are anticipated to rise due to the merger. ETP holds 70% interest in Lone Star with Regency holding the remainder (OGJ Online, Nov. 6, 2014).

The deal also expands ETP’s presence in the Marcellus and Utica shales, where Regency’s operations and growth projects complement ETP’s Rover interstate gas pipeline currently under construction, which will create more than 3 bcfd of natural gas takeaway capacity from the areas. Sunoco Logistics Partners LP also has an asset base in Appalachia.

ETP says it intends to become a “major player” in the Marcellus and Utica, which in part is achieved by the merger.

Mike Bradley, Regency’s chief executive officer, commented from his company’s perspective, “In light of the current volatility in commodity prices and the changes in the capital markets, it became apparent over the last several months that Regency needed more scale and diversification, along with an investment grade balance sheet, to continue its growth. As a result, the combination with ETP became a logical transaction.”

Did You Like this Article? Get All the Energy Industry News Delivered to Your Inbox

Subscribe to an email newsletter today at no cost and receive the latest news and information.

 Subscribe Now

Whitepapers

Logistics Risk Management in the Transformer Industry

Transformers often are shipped thousands of miles, involving multiple handoffs,and more than a do...

Secrets of Barco UniSee Mount Revealed

Last year Barco introduced UniSee, a revolutionary large-scale visualization platform designed to...

The Time is Right for Optimum Reliability: Capital-Intensive Industries and Asset Performance Management

Imagine a plant that is no longer at risk of a random shutdown. Imagine not worrying about losing...

Going Digital: The New Normal in Oil & Gas

In this whitepaper you will learn how Keystone Engineering, ONGC, and Saipem are using software t...