The Federal Trade Commission (FTC) has given the green light to BreitBurn Energy Partners LP’s plan to buy all of Quicksilver Resources Inc.’s natural gas properties in Michigan, Indiana and Kentucky for $750 million in cash and 21.35 million of BreitBurn’s common units. The transaction, which is targeted for closure on Nov. 1, is 94% weighted to gas, with a total value of about $1.45 billion.
Los Angeles, CA-based BreitBurn’s proposed purchase of producer Quicksilver Resources cleared the Hard-Scott-Rodino waiting period on Oct. 12, with the FTC imposing no restrictions on the deal. The agreement between the two companies was first announced in mid-September (see Daily GPI, Sept. 13).
BreitBurn, the master limited partnership (MLP) subsidiary of Calgary’s Provident Energy Trust, will acquire more than 5,400 producing wells, related gas gathering and processing systems and Quicksilver’s interests in approximately 260,000 net undeveloped acres. The properties had total proved reserves of approximately 539 Bcfe at year-end 2006, of which about 94% was natural gas.
Net production from the Fort Worth, TX-based producer’s properties for the first half of this year was about 75.4 Bcfe/d, representing approximately 38% of Quicksilver’s total production for that period.
Up to now the BreitBurn MLP has been 95% weighted to oil, with its operations centered in Southern California and Wyoming. BreitBurn will finance the transaction with a combination of private equity, bank debt and the vendor take-back by Quicksilver Resources of the common units. Provident is not participating in the equity offering, and the transaction will reduce its ownership in the MLP to 23% from 51%. However, Provident will continue to control the entire BreitBurn entity through its ownership of the general partner.
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