Midstream JV to spend nearly $2 billion for assets

By OGJ editors
HOUSTON, Mar. 23
-- Energy Transfer Partners LP and Regency Energy Partners LP, both of Dallas, have formed a joint venture to buy LDH Energy Asset Holdings LLC from Louis Dreyfus Highbridge Energy LLC for $1.925 billion.

LDH owns and operates NGL storage, fractionation, and transportation. The storage is mostly at Mont Belvieu, Tex. Its 1,066-mile, 144,000-b/d intrastate West Texas pipeline moves NGLs from the Permian basin through the Barnett shale production area and terminates at Mont Belvieu storage and fractionation. LDH also owns and operates 25,000-b/d fractionation and processing in Louisiana.

Acquisition of LDH will expand ETP’s and Regency’s assets, said the joint-company announcement today, adding an NGL platform with storage, transportation, and fractionation capabilities. Additionally, this acquisition will provide both ETP and Regency with additional consistent fee-based revenues.

At the sale’s closing, ETP will contribute $1.35 billion in exchange for a 70% interest in the joint venture, while Regency will contribute $578 million for a 30% interest. The acquisition will close in second quarter of this year.

The JV will be managed by a two-person board of directors, with ETP and Regency each appointing one director. ETP will operate the assets on behalf of the JV with existing LDH employees.

Mike Bradley, president and chief executive officer of Regency, said Louis Dreyfus will remain a customer of LDH.

ETP’s owner, Energy Transfer Equity, acquired 100% interest in Regency’s general partner in May 2010. Today, ETE owns the general partner of both ETP and Regency, both of which remain independent publicly traded partnerships.

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