This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

The Deal: Regency Energy Makes Two Asset Buys Worth $1.6B

Stocks in this article: RGP PVR

NEW YORK (The Deal) -- Regency Energy Partners (RGP - Get Report) acquired nearly $1.6 billion worth of Texan assets on Monday, Dec. 23.

In the bigger deal, the Houston-based midstream services provider said it will purchase Eagle Rock Energy Partners' midstream business for about $1.3 billion in stock and cash, including debt.

The move will expand Regency's presence in the Eastern and Southern Texas Panhandle. The assets exchanging hands include about 8,100 miles of pipeline.

"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 Regency CEO Mike Bradley in a statement.

Bradley added that the transaction will compliment Regency's pending $5.6 billion acquisition of PVR Partners (PVR), announced in October.

"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," Bradley added.

Eagle Rock, also based in Houston, said the divestiture is part of its strategy to become a pure play upstream master limited partnership. The company is going to use the sale proceeds to pay down debt.

In a second-quarter earnings call, Eagle Rock CEO Joseph Mills had said the company might consider selling assets in the South Central Oklahoma Oil Province to address its debt, then pegged at $1.16 billion.

Regency is going to fund the acquisition by issuing $200 million of common units to Eagle Rock, another $400 million in common units to Regency's general partner Energy Transfer Equity, and is going to exchange up to $550 million of Eagle Rock's senior notes for Regency senior notes. Regency is also going to draw from its credit facility.

Regency expects to complete the transaction in the second quarter of 2014.

Barclays Capital Inc. and Andrews Kurth LLP advised Regency.

Evercore Group LLC and Citigroup Global Markets Inc. advised Eagle Rock which was represented by Vinson & Elkins LLP.

Separately on Monday, Regency said it is going to acquire Hoover Energy Partners' midstream business for about $290 million. That move will expand Regency's presence in the Delaware Basin in West Texas.

Regency is going to fund the acquisition by issuing $98 million of common units to Hoover and the remainder from its credit facility. The Hoover transaction is expected to close in the first quarter.

Regency shares opened 1.5% higher to $24.53 per share on Monday morning, giving it a market capitalization of $5.1 billion. Eagle Rock Energy was up 12.64% in early morning trading Monday to $5.92 per share, giving it a market capitalization of about $945 million.

-- Written by Demitri Diakantonis

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs