Hicks, Muse, Tate & Furst Inc., a mega-investment firm based in Dallas and London, has announced the signing of a definitive agreement to acquire Regency Gas Services LLC. of Dallas in a transaction valued at $405 million, more than double the cost of Regency’s major assets that were acquired in the last year and a half, mainly from El Paso Energy and Duke Energy.

Regency, formed in June 2003, operates midstream gas gathering, processing and transmission assets in North Louisiana, West Texas and the Midcontinent region. Completion of the transaction is expected to occur within 30 days.

Regency owns and operates five gas gathering systems, one major transmission system and five cryogenic gas liquids processing plants. The company’s pipeline systems, anchored by contractual relationships with more than 500 producers, connect approximately 2,800 wells to nearly 3,000 miles of pipeline with current throughput of approximately 450 MMcf/d. Its processing plants have aggregate capacity of 330 MMcf/d.

Regency was formed by a group of experienced energy industry operators with equity backing from Charlesbank Capital Partners, LLC of Boston. It is headed by Chairman David Biegler, former vice chairman of TXU, and President Jim Bryant, formerly CEO of Endevco.

The company started up with the $120 million purchase from El Paso Field Services of gas gathering, processing, treating and transmission pipeline assets principally located in Kansas, Oklahoma and North Louisiana.

In March of this year Regency added on gathering, processing and treating assets in West Texas acquired from Duke Energy Field Services LP with a transaction value of approximately $62 million. The facilities, known as the Waha system, consist of more than 600 miles of pipeline, 40,000 horsepower of compression and gas processing and treating capacities of more than 125 MMcf/d.

The following month Regency completed the purchase of natural gas treating assets in Louisiana and Texas from Cardinal Gas Services for approximately $3.4 million (see Daily GPI, April 21).

The Regency purchase is the second energy acquisition for Hicks, Muse, which has investments in manufacturing, real estate and consumer and food products.

John R. Muse, president and chairman-designate of Hicks, Muse, said: “The Regency transaction is another example of our sector-focused energy strategy and represents an attractive platform to apply a value-added strategy to midstream energy assets.”

Joe Colonnetta, a partner of Hicks, Muse, said, “The Regency deal is a unique opportunity to acquire, in one transaction, major positions in three established energy-producing regions in North America, and to create a strategic and diversified platform that bridges the stepped-up drilling for natural gas to the growing demand for gas and related products among end-users. As natural gas production increases to meet growing demand in the United States, we plan to fully exploit and realize Regency’s internal and external growth potential.”

In addition to Regency, previous Hicks, Muse energy transactions include the recent acquisition of gas producer BlackBrush Energy, Inc., as well as past investments in Triton Energy, Ltd. and Trident NGL, Inc.

With a total of more than $11 billion under management since inception in 1989, Hicks, Muse, Tate & Furst has completed or currently has pending more than 400 transactions with a total capital value of approximately $50 billion.

©Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.