HOUSTON, Aug. 10, 2012 (GLOBE NEWSWIRE) -- Eagle Rock Energy Partners, L.P. (the "Partnership" or "Eagle Rock") (Nasdaq:EROC) announced today that it has signed a definitive agreement to acquire BP America Production Company's ("BP") Sunray and Hemphill processing plants and associated 2,500 mile gathering system serving the liquids-rich Texas Panhandle (the "BP Panhandle System") for $227.5 million in cash, subject to customary purchase price adjustments. Eagle Rock and BP will enter into at closing a 20-year, fixed-fee Gas Gathering and Processing Agreement under which Eagle Rock will gather and process BP's natural gas production from the existing connected wells. Furthermore, BP and its joint venture partners will commit to Eagle Rock under the same Gas Gathering and Processing terms all future natural gas production from new wells drilled within an initial two-year period from closing, subject to mutually-agreed extensions, and within a two-mile radius of the existing 2,500 mile gathering system. BP Panhandle System gathering volumes in the first half of 2012 averaged approximately 180 MMcf/d, and the Partnership expects to continue to grow the overall throughput from the Texas Panhandle area based on the drilling programs from BP and third party producers active in the area.
Strategic benefits of the transaction include:
- Significantly expands and strategically complements Eagle Rock's existing gathering and processing systems into the Granite Wash, Cleveland, Tonkawa and Hogshooter plays in the Texas Panhandle.
- Establishes a long-term strategic partnership with BP through BP's commitment of existing and future production in an extensive acreage dedication in the Texas Panhandle.
- Increases Eagle Rock's fixed-fee contract mix within its Midstream Business.
- Anticipated volume growth and integration benefits provide a path to meaningful accretion to distributable cash flow per unit in 2014 and beyond.
The closing of the acquisition is expected to occur on October 1, 2012, subject to regulatory clearances, including pre-merger notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and other customary closing conditions.