Breitburn Energy Partners LP (BBEP) said it would acquire QR
Energy LP (QRE) in an equity-and-cash deal valued at nearly $2
billion.
The combined company will become the largest, oil-weighted
upstream oil and gas master limited partnership, with current
average daily production of about 57,300 barrels of oil equivalent
a day, the companies said.
The deal would boost Breitburn's ability to generate greater
cash flow and is expected to add to distributable cash flow per
unit, the company said.
Breitburn's senior management team will lead the combined
company and plans to employ all of QR Energy's engineering,
operations, and support staff, excluding those that are being
retained by Quantum Resources Management LLC.
Breitburn will also add a new member to its board, who will be
selected by both companies.
Holders of QR Energy's common and Class B units will receive
0.9856 of a Breitburn unit for each unit of QRE held, for a
consideration of $22.48 a unit, marking a 19% premium to QRE's
latest closing price.
Holders of QR Energy Class C convertible preferred units will
also receive $350 million in cash at closing, bringing the deal's
stock and cash value to about $1.97 billion.
Including QR Energy's existing net debt and outstanding Class C
convertible preferred units, the deal is valued at about $3
billion, the companies said.
Breitburn has agreed to recommend to its board a distribution
increase to $2.08 per unit on an annualized basis, upon the deal's
closing.
The deal, which is expected to close later this year or in early
2015, has already been approved by the boards of both
companies.
Write to Erin McCarthy at erin.mccarthy@wsj.com
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