Eagle Rock Energy Partners LP is buying gas gathering systems and related facilities primarily in Wheeler and Hemphill counties in the Texas Panhandle from CenterPoint Energy Field Services Inc. for $27.5 million, the partnership said Monday.
The deal "significantly expands our footprint in our core growth area in the Granite Wash play," said Eagle Rock CEO Joseph A. Mills. "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."
Assets to be acquired 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 are "highly complementary to Eagle Rock's existing East Panhandle system," the partnership said.
Eagle Rock is adding about 18,600 MMBtu/d of existing gathered volumes generating mostly fixed-fee revenues and the ability to provide processing to existing and future producers on the acquired system through interconnects with its East Panhandle system, including the newly installed Phoenix Plant in Hemphill County.
The deal expands Eagle Rock's footprint in the Granite Wash play, "particularly into the highly active, liquids-rich portion of the play in Wheeler County," the partnership said.
The price reflects a 7.6-times multiple of Eagle Rock's 2011 estimated adjusted earnings before interest, taxes, depreciation and amortization from the assets, in partial combination with its Phoenix Plant. The acquisition is expected to be accretive to distributable cash flow per unit in 2011 and beyond assuming no increase in the number of outstanding common units.
The transaction has an effective date of Oct. 1 and is expected to close on or around Oct. 15.
Separately Eagle Rock said it has acquired additional interests in the Big Escambia Creek Field in southern Alabama (and the nearby Flomaton and Fanny Church Fields) from Indigo Minerals LLC for $4.2 million with an effective date of Aug. 1. These interests are in wells in which the partnership currently owns a significant interest and are nearly 100% operated by the partnership.
Eagle Rock estimates that the proved reserves associated with the interests are 216 Mbbl of condensate, 555 MMcf of natural gas and 102 Mbbl of natural gas liquids, and are 87% proved developed producing. Currently, the daily production rate associated with the interests is 130 Boe/d.
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