Breitburn Energy Partners LP To Acquire QR Energy, LP For Approximately $3.0 Billion In Unit-for-Unit Transaction

Breitburn Energy Partners LP (NASDAQ:BBEP) and QR Energy, LP (NYSE: QRE) today announced the signing of a definitive merger agreement pursuant to which Breitburn will acquire QR Energy in a unit-for-unit exchange implying a transaction value of approximately $3.0 billion, including QR Energy’s existing net debt and outstanding Class C Convertible Preferred Units.

As a result of the merger, Breitburn will become the largest, oil-weighted upstream oil and gas master limited partnership with a pro forma enterprise value of approximately $7.8 billion and current average daily production of approximately 57,300 boe/d, 67% liquids, based on second quarter results. The combination enhances Breitburn’s ability to generate greater cash flow and creates significant incremental near-term and long-term value for unitholders. The transaction is expected to be accretive to distributable cash flow per unit, and upon closing of the transaction, Breitburn has agreed to recommend to its Board a distribution increase to $2.08 per unit on an annualized basis.

Halbert S. Washburn, Breitburn’s Chief Executive Officer, said, “We are very pleased to reach this agreement with QR Energy, a company that we have always admired given its enviable MLP-friendly assets and engineering-focused operating strategy that is strikingly similar to our own. This world-class portfolio of conventional properties in large, oil rich basins fits perfectly with our asset base and improves our ability to deliver shallow, predictable decline rates that generate industry-leading margins. The combination offers immediate G&A savings and significant accretion for all unitholders. Even more importantly, our enhanced scale, diversification, and intellectual capital will better position Breitburn to efficiently use its capital to create long-term value for unitholders. We look forward to welcoming QR Energy’s employees into the Breitburn organization.”

“We consider Breitburn an ideal merger partner,” said Alan L. Smith, QR Energy’s Chief Executive Officer, “and believe this combination creates an unrivaled operator of mature assets with exposure to nearly every conventional basin in the United States.” Mr. Smith continued, “Breitburn has a proven 26 year track record of making big oil fields bigger and we are excited to see that trend continue with the addition of our extensive inventory of organic growth projects. I am confident that our talented employees will bring unique expertise to Breitburn and that all stakeholders will benefit from the larger, stronger Breitburn. We believe the immediate premium enjoyed by our unitholders will be surpassed by the value shared by all unitholders participating in the future success of the combined company.”

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