NEW YORK (The Deal) -- Regency Energy Partners (RGP) 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.