Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Regency Energy Partners LP | d649193d8k.htm |
| EX-2.1 - EX-2.1 - Regency Energy Partners LP | d649193dex21.htm |
| EX-10.1 - EX-10.1 - Regency Energy Partners LP | d649193dex101.htm |
| EX-99.1 - EX-99.1 - Regency Energy Partners LP | d649193dex991.htm |
 Regency Energy
Partners LP Acquisitions of Eagle Rock Energy Partners, L.P.’s Midstream Assets
& Hoover Energy Partners LP’s Midstream Assets
December 23, 2013
Exhibit 99.2 |
 Cautionary
Statement Regarding Forward-Looking Statements This presentation includes
“forward-looking” statements. Forward-looking statements are
identified as any statement that does
not
relate
strictly
to
historical
or
current
facts.
Statements
using
words
such
as
“anticipate,”
“believe,”
“intend,”
“project,”
“plan,”
“expect,”
“continue,”
“estimate,”
“goal,”
“forecast,”
“may”
or similar expressions help identify forward-
looking statements. Regency Energy Partners LP (“Regency”) and PVR Partner,
L.P. (“PVR”) cannot give any assurance that expectations and projections
about future events will prove to be correct. Forward-looking statements are subject to a variety
of risks, uncertainties and assumptions. These risks and uncertainties include the risks
that the proposed transaction may not be
consummated
or
the
benefits
contemplated
therefrom
may
not
be
realized.
Additional
risks
include:
the
ability
to
obtain
requisite regulatory and unitholder approval and the satisfaction of the other conditions to
the consummation of the
proposed
transaction,
the
ability
of
Regency
to
successfully
integrate
PVR’s
operations
and
employees
and
realize
anticipated synergies and cost savings, the potential impact of the announcement or
consummation of the proposed transaction on relationships, including with employees,
suppliers, customers, competitors and credit rating agencies, the ability
to
achieve
revenue,
DCF
and
EBITDA
growth,
volatility
in
the
price
of
oil,
natural
gas,
and
natural
gas
liquids,
declines
in
the credit markets and the availability of credit for the combined company as well as for
producers connected to the combined company’s system and its customers, the level
of creditworthiness of, and performance by counterparties and customers, the ability to
access capital to fund organic growth projects and acquisitions, including significant acquisitions, and
the ability to obtain debt and equity financing on satisfactory terms, the use of derivative
financial instruments to hedge commodity and interest rate risks, the amount of
collateral required to be posted from time-to-time, changes in commodity
prices, interest rates, and demand for the combined company's services, changes in laws and
regulations impacting the midstream sector of the natural gas industry, weather and
other natural phenomena, acts of terrorism and war, industry changes including the
impact of consolidations and changes in competition, the ability to obtain required approvals for
construction or modernization of facilities and the timing of production from such facilities,
and the effect of accounting pronouncements issued periodically by accounting standard
setting boards. Therefore, actual results and outcomes may differ materially from
those expressed in such forward-looking statements. These and other risks and
uncertainties are discussed in more detail in filings made by Regency and PVR with the Securities
and Exchange Commission, which are available to the public. Regency and PVR undertake no
obligation to update publicly or to revise any forward-looking statements, whether
as a result of new information, future events or otherwise. 2
|
 Regency will
acquire Eagle Rock Energy Partners, L.P.’s (EROC) midstream assets for approximately $1.3 billion
•
Complements core gathering and processing business and further diversifies basin exposure in
the Texas Panhandle and East Texas
•
Adds new organic growth opportunities
Expected to be immediately accretive to distributable cash flow per common unit, both on a
stand-alone basis and pro forma for the PVR acquisition
The acquisition is subject to approval of EROC’s unitholders, Hart-Scott-Rodino
Anti-trust Improvements Act approval and other customary closing conditions and is
expected to close in the second quarter of 2014 Transaction Highlights
3
Acquisition of EROC’s Midstream Assets
Acquisition of Hoover’s Midstream Assets
Regency will acquire Hoover Energy Partner LP’s (Hoover) midstream assets for
approximately $290 million •
Complements Regency’s existing footprint in the southern portion of the Delaware Basin
and expands services to producers into crude and water gathering
•
Adds additional synergies and new organic growth opportunities
Expected to be immediately accretive to distributable cash flow per common unit
The acquisition is subject to approval under the Hart-Scott-Rodino Anti-trust
Improvements Act and other customary closing conditions and is expected to close in the
first quarter of 2014 Regency management expects to recommend to its Board of Directors
distribution increases that would
represent a growth rate of 6-8% for full-year 2014¹
1 Subject to Board approval based on Regency’s future operating results, including the
performance of the acquired businesses |
 Financing
Overview 4
Total consideration of approximately $1.3 billion financed via:
All financing needs required to fund the transactions are complete
Acquisition of EROC’s Midstream Assets
Acquisition of Hoover’s Midstream Assets
Total consideration of approximately $290 million financed via:
•
The issuance of $200 million of Regency common units to EROC
•
The issuance of $400 million of Regency common units to Energy Transfer Equity
(NYSE:ETE) •
The issuance of up to $550 million of Regency senior notes in exchange for outstanding EROC
senior notes •
The remaining consideration will be funded with borrowings from Regency’s revolving
credit facility •
The issuance of approximately $98 million of Regency common units to Hoover
•
The remaining consideration will be funded with borrowings from Regency’s revolving
credit facility |
 Proposed Acquisition of Eagle Rock Energy Partners, L.P.’s
Midstream Assets |
 Strategic
Highlights Combination of Regency, PVR and Eagle Rock’s midstream assets will
strengthen Regency’s position as a midstream provider in the Mid-Continent
region and will provide additional growth opportunities Top Tier Liquid
Rich Plays
•
Stacked pay multiplier provides significant drilling opportunities for many years
•
Single well economics in area continue to be top tier
Strong Producer
Relationships
Recent EROC
Investments
Enhanced
Long-Term
Value Creation
6
Invested over $400 million of growth capital since 2011
Recently brought 60 MMcf/d Wheeler Plant in the Texas Panhandle online
Infrastructure set up to allow for additional expansion based on drilling activity Expand Regency’s position in liquids-rich basins that
have long lived production histories
Texas Panhandle assets are in a core area and immediately expand Regency’s position as a
midstream provider in the region
EROC assets will complement Regency’s core gathering and processing business and will
diversify Regency’s basin exposure
Combined system expected to provide significant synergies, increase efficiencies on
Regency’s current system, and enhance service for Regency’s customers
Provides immediate accretion that is balance sheet neutral
Large system footprint in East Texas overlies several attractive shale plays
including the Haynesville Shale, Austin Chalk, Tuscaloosa Marine Shale and
Woodbine Shale Long-term contractual relationships
with high quality producers
Over 3,000,000 gross acres dedicated to system
Panhandle system is well positioned and highly efficient to support existing customers and
capture new opportunities
Top customers include premier E&P companies such as Anadarko, Apache, BP, Chesapeake,
Exxon, Linn, EOG Resources, Jones Energy and
Halcón |
 EROC Midstream
Overview Texas Panhandle System
•
~6,500 miles of gathering pipeline
•
~550 MMcfd of processing capacity
•
BP acquisition has led to additional fee-based acreage
dedications
Over 3,000,000 gross acres dedicated with top tier E&P
companies
~40% of gross margin from fee-based agreements
Future growth opportunities around existing system for
acreage dedications and condensate logistics
EROC Gathering Systems
EROC Processing Plant
Legend
South
East
Texas /
Panhandle
Texas
GoM
Total
Gathering System Pipeline Miles:
6,514
1,444
176
8,134
Processing Plants:
11
5
3
19
Processing Capacity (MMcf/d):
548
168
116
832
Compression HP:
227,414
35,672
8,080
271,166
Q2 2013 Reported Gathering Volume (MMcfd):
350
149
46
545
Q2 2013 Reported Equity NGL & Condensate (Bpd):
6,162
846
74
7,082
Highlights
Area of Operations
Asset Summary
Commodity Mix
2013E Gross Margin
7 |
 8
Diversified, Well-Positioned Asset Base
Pro Forma Asset Base
LA
AR
MO
KS
OK
NM
TX
AL
PVR Coal Assets
KY
OH
IN
WV
TN
IL
VA
NC
NY
PA
EROC Gathering Systems
EROC Crude Oil Pipeline
RGP NGL Pipeline
EROC Processing Plant
RGP Processing / Treating Plant
PVR Processing Plant
PVR Pipelines
PVR Coal Assets
Texas Panhandle
East Texas
RGP
Gathering
Systems
/
Pipeline |
 2
Pro forma for PVR
2013E Segment Gross Margin
(1)
2013E Commodity Mix
(1)
9
Pro Forma Business Mix In Line With Strategic Targets
Regency
(2)
3
2
Pro Forma
Regency
(2)
3
2
Pro Forma
G&P
57%
Contract Services
14%
14%
NGL Services
8%
Coal
7%
G&P
63%
Contract Services
12%
12%
NGL Services
7%
Coal
6%
Fee Based
78%
Commodity
22%
Fee Based
73%
Commodity
27%
1
Excludes corporate, eliminations and Gulf State contributions Nat. Gas Trans.
Nat. Gas Trans. |
 Proposed Acquisition of Hoover Energy Partners LP’s
Midstream Assets |
 11
Strategic Rationale
The purchase of Hoover Energy Partners LP will complement and provide growth opportunities
around Regency’s existing assets in the West Texas/Permian Region
Strategically
Located Assets
Established first-mover position in the southern portion of the Delaware
Basin 44 rigs currently running in Hoover’s Operating Area and new
permitting and drilling activity extending south and east across Hoover’s
system Full-Service
Midstream
Provider
The crude and water gathering systems will expand Regency’s producer
services •
The Perry Ranch Station major destination for crude gathered in the region and has a
20-year dedication •
The
Delaware
Water
System
is
the
only
“open
access”
water
gathering
and
disposal
system
in
the
Delaware
Basin
Hoover’s full-service business model captures multiple revenue streams from
each connected well and provides a strategic position from which to secure new
business and retain current customers Large,
Long-Term
Dedications
164,834 gross acres dedicated for crude oil gathering and transportation with a
weighted-average remaining term of approximately 5 years
2—year, 2,006 square-mile area dedication for crude oil gathered by
truck 190,723 gross acres dedicated for natural gas gathering with a
weighted-average remaining term of approximately 8 years
58,337 gross acres dedicated for water gathering and disposal services with a
weighted-average remaining term of approximately 2 years
Growth
Outlook and
Opportunities
Near-term growth expected to be driven by existing contracts across all business
lines Long-term growth driven by new development opportunities expected to
be contracted within six to nine months Hoover
also
has
a
number
of
growth
projects
in
various
stages
of
development;
including
•
Two crude oil gathering projects and one water gathering project
•
Would require the construction of 39 miles of crude oil and 28 miles of water
gathering pipelines, respectively |
 12
Combined System Map |
 13
Conclusion
Transactions enhance the combined company’s position in attractive, high-growth
regions •
Everest: Provides added scale and scope in the Texas Panhandle, and when combined with PVR,
will strengthen Regency’s as a midstream provider in the region
•
Boulder: Extends presence in the Delaware Basin in West Texas and supports goal of
diversifying service offerings to customers
Transactions and pro forma credit profile are in keeping with Regency’s long-term
financial objectives Both transactions are expected to be immediately accretive to 2014
DCF Regency management expects to recommend to its Board of Directors distribution
increases that would represent a growth rate of 6-8% for full-year
2014¹ 1 Subject to Board approval based on Regency’s future operating results,
including the performance of the acquired businesses |
 Appendix |
 Texas
Panhandle Overview EROC Gathering Systems
EROC Processing Plant
Legend
Highlights
Texas Panhandle Map
EROC’s Texas Panhandle region covers 14 counties in Texas and two
counties in Oklahoma
•
As of June 30, 2013, 339 producers and 3,861 wells and central
delivery points were connected to EROC’s Texas Panhandle system
Texas Panhandle assets consist of 6,514 miles of natural gas gathering
systems and 548 MMcfd of natural gas processing capacity from 11
processing plants, a 1,000 Bpd propane fractionation facility and four
condensate stabilizers with 7,000 Bpd of capacity
Approximately 30% of gross margin generated from fee-based
arrangements
On July 8, 2013, EROC announced the startup of the 60 MMcfd
Wheeler cryogenic processing plant in Wheeler County, Texas
Processing / Treatin
County
Capacity (MMcfd)
Wheeler Plant
Wheeler
60
Canadian Plant
Hemphill
25
Phoenix Arrington Ranch Plant
Hemphill
80
Woodall Plant
Hemphill
60
Hemphill Plant
Hemphill
50
Sunray Plant
Moore
168
Red Deer Plant
Roberts
24
Roberts County Plant
Roberts
20
Cargray Plant
Carson
30
Gray Plant
Gray
20
Lefors Plant
Gray
11
Goad Treater
Hemphill
20
Total Processing / Treating Capacity
568
Plant Summary
Multiple Zone Play
15
TX
LA
OK |
 East Texas
Overview The East Texas assets gather and process volumes produced primarily
from the Austin Chalk, Woodbine and Travis Peak plays
The Brookeland system currently has two rigs drilling on dedicated
acreage targeting Austin Chalk
New 10-year 823,000 area dedication that stretches eastward on the
Brookeland system and will increase system volumes as producers
execute planned drilling
Over 80% of gross margin generated from fee-based arrangements
Additional ongoing discussions covering the Austin Chalk, Tuscaloosa
Marine Shale and Woodbine with various producers
Prospects
EOG
Halcón
Ursa
Dedicated Acreage
BBX
Kovar
Swift
Swift Option
1
2
1
2
Indian Springs
(1)
Brookeland
Belle Bower
Capacity (MMcfd): 20.0
Brookeland
Capacity (MMcfd): 100.0
Rosewood
Capacity (MMcfd): 10.0
Indian Springs (25% non-op)
Capacity (net) (MMcfd): 36.0
Central
Capacity (MMcfd): 20.0
Legend
TX
LA
EROC Gathering Systems
EROC Processing Plant
East Texas Producer Map
Highlights
East Texas System Map
16 |