Company's adjusted EBITDA increased 40% to $74 million for 2Q10
Dallas – Along with its second quarter earnings announcement, midstream energy partnership Regency Energy Partners LP (Nasdaq: RGNC) has announced its plan to acquire Zephyr Gas Services, a field services company based in Houston, Texas, for $185 million.
Regency intends to fund the acquisition under its revolving credit facility.
The company also announced its financial results for the second quarter ended June 30, 2010. Regency’s adjusted EBITDA increased 40% to $74 million for the second quarter of 2010, compared to $53 million for the second quarter of 2009.
Byron Kelley, president and CEO of Regency, commented on the acquisition: “This is a rare opportunity to acquire a fast growing and successful business that complements our current service offerings and brings another strong component to our midstream service portfolio.”
Zephyr’s assets closely align with Regency’s Gathering and Processing and Compression segments as both are strategically located in high-growth areas, including the Haynesville and Eagle Ford shales. In addition to treating, Zephyr provides a full range of field services, including gas cooling, dehydration, JT plant leasing and sulfur treating services. Regency expects to integrate Zephyr’s current management into the existing reporting structure of its Contract Compression segment.
The acquisition is subject to customary closing conditions.
Financial results
For the second quarter ended June 30, 2010, Regency’s adjusted EBITDA increased 40% to $74 million for the second quarter of 2010, compared to $53 million for the second quarter of 2009.
“From acquiring additional ownership interest in the Haynesville Joint Venture to expanding our fee-based asset portfolio through the acquisition of 49.9% of the Midcontinent Express Pipeline, we have focused on delivering on all of our business growth objectives,” said Kelley.
According to the company’s 2Q10 earnings statement, the company experienced a $14-million increase in income from unconsolidated subsidiaries due to a full quarter’s operation of the Haynesville Expansion Project and the Red River Lateral, Regency’s increased ownership interest in the Haynesville Joint Venture and the acquisition of a 49.9% ownership interest in the Midcontinent Express Pipeline (MEP Joint Venture) in May 2010.
Total combined throughput volumes for the Haynesville Joint Venture averaged 1,156,000 MMbtu per day of natural gas for the second quarter of 2010, compared to an average of 745,000 MMbtu per day of natural gas for the second quarter of 2009.
Total combined throughput volumes for the MEP Joint Venture averaged 1,310,000 MMBtu per day of natural gas for the second quarter of 2010, compared to an average of 464,000 MMBtu per day of natural gas for the second quarter of 2009.
The company believes it is “well positioned to capitalize on further core asset expansion opportunities” as it increases gathering capacity in the Haynesville shale and Eagle Ford shale.
For the second quarter of 2010, the Partnership recorded a net loss of $10 million, compared to net income of $6 million for the second quarter of 2009. This variance was primarily attributable to three non-cash items: (1) a $10-million increase in general and administrative expenses primarily due to vesting of outstanding incentive compensation units upon the change in General Partner control from GE Energy Financial Services to Energy Transfer Equity LP; (2) an $8-million decrease in net realized and unrealized gain from derivatives related to a mark-to-market change in the value of commodity derivatives; and (3) a $4-million decrease in other income and deductions, net, primarily related to a non-cash value change associated with the embedded derivative within the Series A Convertible Redeemable Preferred Units.
Shares of Regency were down -0.9900 (-3.808%) at $25.01 near the end of the day August 9.
Source: Regency Energy Partners