Regency Energy To Buy Pipeline Assets In Texas For $1.6 B
Regency Energy Partners LP, owned by billionaire Kelcy Warren's Energy Transfer Equity LP, said it would buy pipeline and related assets for about $1.6 billion to take advantage of soaring crude production in Texas.
The pipeline operator plans to buy assets in the Texas Panhandle from Eagle Rock Energy Partners for $1.3 billion and assets in the Delaware basin from Hoover Energy Partners for $290 million.
Eagle Rock's shares jumped as much as 17 percent to $6.17 on the Nasdaq on Monday. Regency shares rose 12 percent to $27.21 on the New York Stock Exchange.
"(The deal) is a great Christmas present for EROC unitholders," Robert Baird & Co analyst Ethan Bellamy said.
Massive growth in output from shale fields has led to a shortage of pipelines that can move crude oil to refining hubs.
Natural gas that is produced along with the oil needs to be processed and this has raised the premium for facilities owned by infrastructure companies.
Texas, home to the Permian Basin and the Eagle Ford shale field, is particularly lucrative for pipeline operators.
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