Seeking Alpha

Everyone wins in Eagle Rock-Regency pipeline deal, but Energy Transfer could be "ultimate winner"

Investors love Eagle Rock's (EROC) plan to sell ~$1.3B of Texas Panhandle pipeline assets to Regency Energy Partners (RGP); it's "a great Christmas present for EROC unitholders," Robert Baird analyst Ethan Bellamy says.

With increased capital and lower debt, EROC expects to be much more focused on mergers and acquisitions next year, CEO Joseph Mills said in a conference call.

Meanwhile, RGP expects the deal will be accretive to cash flow and will recommend a 6%-8% increase in distributions this year.

Energy Transfer Equity (ETE) plans to support RGP - which is part of the Energy Transfer family of MLPs - by committing to purchase $400M RGP units as part of the deal, and is the "real ultimate winner" of RGP's expansion and expectations for additional cash flow, the Baird analyst says.

In today's trading, EROC finished +12.5%, RGP +7.7%, ETE +1.3%, ETP +2.4%.

Comments (4)
  • ronstaug
    , contributor
    Comments (65) | Send Message
    We're significant holders of PVR, so obviously pleased with these transactions as they state in their conf. call (just listened to it) that they're accretive & they plan to increase the 2014 distributions by +6% to +8%.


    If EROC is such a good acquisition, I wonder why their YTD chart has been so dreadful when it's been a good yr. for MLP's.
    In any case, I shall drink a toast to their success since we're on fixed incomes & could use a raise next yr.


    *we're getting 1.02 shares of RGP for every share of PVR plus cash of of between .28 to .30 per share. Such a deal! (smiley)
    23 Dec 2013, 07:00 PM Reply Like
  • crl1603
    , contributor
    Comments (355) | Send Message
    anyone have any thoughts as to what the upstream eroc distribution might be.
    i like the insinuation by eroc that they will now be a low leveraged play.
    23 Dec 2013, 07:51 PM Reply Like
  • TGC004
    , contributor
    Comments (454) | Send Message
    As an indirect owner of ETE and ETP this appears to be good news. Will need to evaluate the public disclosures / webcasts to better understand the impact on unit holders.
    23 Dec 2013, 08:58 PM Reply Like
  • cpo111
    , contributor
    Comments (197) | Send Message
    Of course, I was wondering when Mr Scrooge would show up !! I guess trolling for clients is still a Winter sport!!


    Levi & Korsinsky is investigating the Board of Directors of Eagle Rock Energy Partners, L.P. ("Eagle Rock" or "the Company") (Nasdaq: EROC) for possible breaches of fiduciary duty and other violations of state law in connection with the sale of the Company to Regency Energy Partners ("Regency") (NYSE: RGP).


    Under the terms of transaction, Eagle Rock shareholders will receive a combination of cash and stock in a deal totaling up to $1.325 billion. Regency will also offer to exchange Eagle Rock's outstanding senior notes into an equivalent amount of Regency senior unsecured notes. The investigation concerns whether the Eagle Rock Board of Directors breached their fiduciary duties to stockholders by failing to adequately shop the Company before agreeing to enter into this transaction, and whether Regency is underpaying for Eagle Rock shares.
    23 Dec 2013, 11:26 PM Reply Like
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