Eagle Rock Energy Partners LP, Houston, (Nasdaq: EROC) plans to acquire certain gas-gathering systems and related facilities in Wheeler and Hemphill counties in the Texas Panhandle from Centerpoint Energy Field Services Inc. for $27.5 million.
The assets include more than 200 miles of gathering pipeline and related compression and dehydration facilities, together with gas-gathering contracts, rights of way and other intangible assets. The assets are in the core of the Granite Wash play and complement Eagle Rock's existing East Panhandle system.
Benefits include approximately 18,600 MMBtu/d of existing gathered volumes generating mostly fixed fee revenues; the ability to provide processing services to existing and future producers through interconnects into Eagle Rock's East Panhandle system; and the expansion of Eagle Rock's footprint in the Granite Wash play, particularly into the highly active, liquids-rich portion of the play in Wheeler County.
The purchase price for the assets reflects a 7.6 times multiple of Eagle Rock's 2011 estimated Adjusted EBITDA from the assets, in partial combination with the partnership's Phoenix Plant in Hemphill County. The acquisition is also expected to be accretive to distributable cash flow per unit in 2011 and beyond, assuming no increase in the number of outstanding common units from Oct. 4.
"We are very pleased to announce this strategic acquisition for our partnership. Not only does it place Eagle Rock back in growth mode but it significantly expands our footprint in our core growth area in the Granite Wash play," said Joseph A. Mills, chairman and chief executive. "The combination of our existing gathering and processing infrastructure coupled with this acquired gathering infrastructure enables us to provide our producer customers a low-cost gathering and processing alternative in this very active area."
The deal is expected to close by Oct. 15. The effective date is Oct. 1.
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