Energy Transfer Partners to Acquire Certain Interests in PennTex Midstream Partners

Energy Transfer Partners, L.P. today announced it has entered into a definitive agreement to acquire certain interests in PennTex Midstream Partners, LP from various parties (“Sellers”) for total consideration of approximately $640 million. Upon closing the transaction, ETP will own 100% of the general partner of PTXP, together with all of its incentive distribution rights (IDRs), as well as 6.3 million common units and all 20 million subordinated units of PTXP, representing approximately 65 percent of the total limited partner interests in PTXP.

The acquisition consideration paid by ETP will be 50 percent ETP common units issued directly to Sellers and 50 percent cash. The cash portion of the purchase price will be funded with a combination of proceeds from common units recently issued under ETP’s At-The-Market program and borrowings under its revolving credit facility. Additionally, in conjunction with the transaction, Energy Transfer Equity, L.P. (NYSE: ETE) has agreed to an IDR waiver in the amount of $33 million annually that will run in perpetuity.

PTXP owns midstream assets strategically located in the Terryville Complex in northern Louisiana that consist of a rich natural gas gathering system, two cryogenic natural gas processing plants totaling 400 million cubic feet per day of capacity, along with residue gas and natural gas liquids (NGLs) pipelines. These assets complement ETP’s existing midstream footprint in the region and position ETP for significant growth and value creation.

PTXP’s primary customer is Range Resources Corporation (NYSE: RRC). In addition to long-term fee-based gathering and processing agreements that include minimum volume commitments, PTXP and RRC are parties to an agreement, which provides PTXP the exclusive right to build all of the midstream infrastructure for RRC within an area of mutual interest (AMI) in northern Louisiana and to provide midstream services to support RRC’s current and future production on substantially all of its operated acreage within the AMI.

The transaction is expected to close in the fourth quarter of 2016, subject to customary closing conditions.

Credit Suisse acted as the financial advisor to ETP for the transaction. Andrews Kurth Kenyon LLP served as legal counsel to ETP.