Regency Energy Partners LP (NYSE: RGP) (Regency) today announced plans to purchase the midstream assets of Hoover Energy Partners LP (Hoover). The acquisition, valued at approximately $290 million, will complement Regency’s existing footprint in the southern portion of the Delaware Basin and expands its services to producers into crude and water gathering.
Hoover’s midstream services include crude oil gathering, transportation and terminaling, condensate handling, natural gas gathering, treating, processing, and water gathering and disposal services. The Perry Ranch Station is a major destination for crude gathered by a customer in the region and is backed by a 20-year dedication. In addition, Hoover’s Delaware Water System is the only open-access water gathering and disposal system in the Delaware Basin.
“This acquisition further extends Regency’s presence in the Delaware Basin in West Texas and supports our goal of diversifying our service offerings to our customers by adding crude and water gathering services,” said Jim Holotik, executive vice president and chief commercial officer of Regency. “Hoover’s geographic footprint enhances our existing Permian Basin service capabilities and expands our strategic presence in the developing Bone Spring, Wolfcamp and Wolfbone producing areas.”
Regency expects the acquisition to be accretive in 2014 and to finance the acquisition by issuing approximately $98 million of Regency common units to Hoover. The remaining portion of the consideration will be funded from borrowings under Regency’s revolving credit facility. The acquisition is expected to close in the first quarter of 2014, and is subject to Hart-Scott-Rodino Antitrust Improvements Act approval and other customary closing conditions.