Natural gas infrastructure service provider,
Regency Energy Partners L.P.
) $1.3 billion acquisition of
Eagle Rock Energy Partners, L.P.
) midstream business has been cleared by the U.S. Federal Trade
Commission (FTC). Earlier, the transaction was clouded by the
ongoing investigation by FTC.
The Eagle Rock assets comprise gathering pipelines of about 8,100
miles and processing plants with a capacity of more than 800
million cubic feet per day (MMcf/d). Moreover, the cash flow from
these midstream assets are aided by the dedicated large, long-term
This acquisition will result in diversification of Regency's asset
portfolio. This will provide an additional growth opportunity for
Regency to explore the liquid-rich areas. The partnership expects
this acquisition to increase unitholder value with the transaction
having immediate positive effect on distributable cash flow. This
increased distribution could result in 6% to 8% growth for
Regency is a growth-oriented master limited partnership engaged in
the gathering and processing, compression, treating and
transportation of natural gas and the transportation, fractionation
and storage of natural gas liquids. It operates in Texas,
Louisiana, Oklahoma and Kansas. The partnership witnessed strong
performance in the first quarter owing to significant volume growth
in its gathering and processing and NGL services businesses.
Lately, Regency has been focusing on both organic and inorganic
growth. In the first quarter, the partnership incurred $188 million
in growth capital expenditures, of which $83 million was for the
Gathering and Processing segment, $80 million for the Contract
Services segment, $23 million for the NGL Services segment and $2
million for the Transportation segment.
In 2014, Regency expects to invest approximately $1.2 billion in
growth capital expenditures. Of this, $860 million will be spent on
Gathering and Processing growth projects, $250 million is allotted
to NGL Services and $110 million to Contract Services.
Dallas, TX-based Regency Energy currently holds a Zacks Rank #3
(Hold). Other better-ranked stocks in the oil and gas sector
Matrix Service Company
), both with a Zacks Rank #1 (Strong Buy).
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