Regency Energy Partners LP has agreed to acquire Nexus Gas Holdings LLC for $85 million, expanding its reach in North Louisiana and East Texas, the Dallas-based company said.
Nexus is a midstream provider of gas gathering, dehydration and compression services for producers in DeSoto Parish, LA, and Shelby County, TX. The Nexus gathering system consists of 80 miles of low- and high-pressure pipelines and is currently gathering more than 110 MMcf/d from approximately 500 wells. The acquisition will be immediately accretive to Regency unitholders, Regency said.
The acquisition is subject to approval under the Hart-Scott-Rodino Antitrust Improvements Act and other conditions. Closing is expected to occur in late first quarter or early second quarter 2008. The purchase price of $85 million is subject to adjustments and will be funded using borrowings under Regency’s revolving credit facility.
With the deal Regency will also acquire Nexus’ agreement to purchase 136 miles of pipeline from Southern Natural Gas Co. (SNG). Before Regency can purchase the pipeline from SNG, the Federal Energy Regulatory Commission must approve the abandonment and certain closing conditions must be met. If the transaction closes under the currently anticipated conditions, Regency will purchase the pipeline from SNG and make an additional payment to Nexus.
“Nexus operates in one of the most prolific producing areas of Louisiana,” said Regency CEO James W. Hunt. “The Nexus assets will be integrated into our North Louisiana asset base.”
A deal late last year in which it acquired FrontStreet Hugoton LLC and FrontStreet Energyone LLC from GE Financial Services for $139 million expanded Regency’s presence in Kansas and complemented its Midcontinent gathering assets (see Daily GPI, Dec. 28, 2007). Regency acquired Pueblo Midstream Gas Corp. earlier last year (see Daily GPI, April 4, 2007).
Regency’s general partner is majority-owned by affiliates of GE Energy Financial Services, a unit of GE (see Daily GPI, June 20, 2007).
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