Breitburn Energy Partners LP (NASDAQ:BBEP) of Los Angeles announced on July 24th that it will acquire Houston-based QR Energy, LP (NYSE: QRE) in a transaction valued at $3 billion.
The merger will make Breitburn the nation’s largest oil-weighted upstream oil and gas master limited partnership, with an enterprise value of $7.8 billion and daily production of approximately 57,300 boe/d (barrels of oil equivalent per day), 67% of it liquids.
Halbert S. Washburn, Breitburn’s Chief Executive Officer, said, “We are very pleased to reach this agreement with QR Energy, a company that we have always admired given its enviable MLP-friendly assets and engineering-focused operating strategy that is strikingly similar to our own.”
He added, “This world-class portfolio of conventional properties in large, oil-rich basins fits perfectly with our asset base, and improves our ability to deliver shallow, predictable decline rates that generate industry-leading margins.”
Mr. Washburn said he expects the transaction to be accretive to the unitholders of the two companies, which operate as limited partners.
“We consider Breitburn an ideal merger partner,” said Alan L. Smith, QR Energy’s Chief Executive Officer, “and believe this combination creates an unrivaled operator of mature assets with exposure to nearly every conventional basin in the United States.”
He added, “Breitburn has a proven 26-year track record of making big oil fields bigger, and we are excited to see that trend continue with the addition of our extensive inventory of organic growth projects.”
Holders of QR Energy’s units will receive approximately 72 million Breitburn units, or 0.9856 of a BBEP unit for each unit of QRE. That is the equivalent of $22.48 per unit to QR Energy unitholders is valued at, based on Breitburn’s closing price of $22.81 on July 23, 2014, representing a 19% premium to QRE’s closing price of $18.87 on July 23, 2014.
Breitburn’s senior management team will lead the combined company, and intends to employ all of QR Energy’s engineering, operations, and support staff except for those who will stay with Quantum Resources Management, LLC.
Breitburn Energy Partners LP, based in Los Angeles, is a publicly-traded independent oil and gas master limited partnership focused on the acquisition, exploitation, development and production of oil and gas properties throughout the United States. Its producing and non-producing crude oil and natural gas reserves are located in Michigan, Oklahoma, Texas, Wyoming, California, Florida, Indiana and Kentucky.
QR Energy, headquartered in Houston, is engaged in the acquisition, production and development of onshore crude oil and natural gas properties in the United States.