DALLAS, Texas - Energy Transfer Partners LP (NYSE: ETP), the third-largest U.S. pipeline partnership, on March 22 announced that will join with an affiliate to buy a pipeline and natural-gas liquids processing plants in Texas for $1.93 billion in cash.
Energy Transfer and Regency Energy Partners LP (Nasdaq: RGNC) will buy LDH Energy Asset Holdings LLC, which owns and operates a natural-gas liquids storage, fractionation and transportation business, the companies said in a statement.
LDH owns and operates a natural gas liquids, or NGL, storage, fractionation and transportation business. LDH's storage assets are primarily located in Mont Belvieu, Texas, one of the largest NGL storage, distribution and trading complexes in North America. Its West Texas Pipeline transports NGLs through a 1,066-mile intrastate pipeline system that originates in the Permian Basin in west Texas, passes through the Barnett Shale production area in north Texas and terminates at the Mont Belvieu storage and fractionation complex. LDH also owns and operates fractionation and processing assets located in Louisiana.
Energy Transfer will pay $1.35 billion for 70 percent of a joint venture that will own the assets, and Regency will pay $578 million for the remaining 30 percent stake. Energy Transfer Partners will operate the assets, the companies, both based in Dallas, said in the statement.
The purchase "suits us very well at a time when we really are trying to move into the transfer of liquids," Kelcy Warren, chief executive officer of Energy Transfer, said in an interview. "We haven't been a big player in that market; that’s about to change."
Energy Transfer and Regency are both controlled by Dallas-based Energy Transfer Equity LP. (NYSE: ETE).
The joint venture will be controlled by a two-member board with a representative from each company. The companies said they will initially finance the purchase with their existing revolving credit lines.