Regency Energy Partners LP (NYSE: RGP) has announced plans to purchase Texas midstream assets from Eagle Rock Energy Partners LP (Nasdaq:EROC). The deal, valued at approximately $1.3 billion, will help Regency expand its operations in Texas, which has seen crude oil production more than double in the past four years.
The purchase includes about 8,100 miles of gathering pipeline in the Texas Panhandle, East Texas and South Texas, and over 800 MMcf/d of processing plants.
“This acquisition represents another attractive growth opportunity for Regency and is very strategic to our plans to increase our scale and expand our basin diversity in liquids-rich areas,” said Mike Bradley, president and chief executive officer of Regency. “When combined with the proposed acquisition of PVR Partners, our expanded footprint will strengthen Regency's position as a midstream provider in the Mid-Continent region and provide additional growth opportunities.”
“We expect this acquisition to be immediately accretive to our distributable cash flow per common unit and we also expect that this acquisition will be accretive to distributable cash flow per common unit on a pro forma basis with the pending acquisition of PVR Partners, L.P. As a result, we believe this transaction supports our objective of creating unitholder value through long-term cash distribution growth,” continued Bradley.
The Eagle Rock acquisition is expected to close in the second quarter of 2014, and is subject to the approval of Eagle Rock’s unitholders, Hart-Scott-Rodino Antitrust Improvements Act approval and other customary closing conditions.
In a separate deal this week, Regency has also agreed to purchase midstream assets from Hoover Energy Partners in the southern portion of the Delaware Basin for about $290 million.