[ACCESSWIRE]
LONDON, UK / ACCESSWIRE / October 26, 2016 / Active Wall St. blog coverage looks at the headline from Energy Transfer Partners, L.P. (NYSE: ETP) as the company announced on October 25th, 2016, that it has entered into a definitive agreement with PennTex Midstream Partners, LLC ("PennTex Development") and the other contributors party thereto acquire certain interests in PennTex Midstream Partners, L.P. (NASDAQ: PTXP) for a total consideration of approximately $640 million. PennTex Development owns a controlling 92.5% interest in PennTex Midstream GP, LLC (the "General Partner"), and the general partner of the Partnership. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.
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Upon closing the transaction, Energy Transfer Partners will own 100% of the general partner of PennTex Midstream Partners, together with all of its incentive distribution rights (IDRs), as well as 6.3 million common units and all 20 million subordinated units of PennTex Midstream Partners, that represents about 65% of the total limited partner interests in PennTex Midstream Partners, the Dallas-based company said in a statement.
The Transaction Details
The acquisition consideration paid by Energy Transfer Partners is 50% common units issued directly to sellers and 50% in cash. The cash portion of the purchase price will be funded with a combination of proceeds from common units recently issued under Energy Transfer Partners' at the market program and borrowings under its revolving credit facility. Additionally, in conjunction with the transaction, Energy Transfer Equity has agreed to an IDR waiver in the amount of $33 million annually that will run in perpetuity.
Why the Sale?
PennTex Midstream Partners owns midstream assets located in the Terryville Complex in northern Louisiana that consist of a rich natural gas gathering system, two cryogenic natural gas processing plants totalling 400 million cubic feet per day of capacity, along with residue gas and natural gas liquids pipelines. These assets would complement Energy Transfer Partners' existing midstream footprint in the region and position the company for significant growth and value creation.
PennTex Midstream Partners' primary customer is Range Resources Corp. (RRC). In addition to long-term fee-based gathering and processing agreements that include minimum volume commitments, PennTex Midstream Partners and RRC are parties to an agreement, which provides PennTex Midstream Partners 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 Q4 2016, subject to customary closing conditions.
Dividend Announcement
On the same day, PennTex Midstream Partners announced that the Board of Directors of the General Partner has approved a cash distribution of $0.2950 per unit, or approximately $1.18 per unit on an annualized basis, for Q3 2016. The distribution will be paid on November 14, 2016 to unit-holders of record as of November 7, 2016. This quarterly distribution represents an increase of $0.0104 per unit, or approximately 3.7%, over the Partnership's distribution of $0.2846 per unit for the quarter ended June 30, 2016.
Stock Performance
Energy Transfer Partners' stock is trading down 1.71%, closing Tuesday's session at $36.24 on volume of 2.79 million shares. The company's shares surged 18.17% since the beginning of the year. Additionally, the stock has advanced 10.39% in the last six months. The company's shares have a dividend yield of 11.64%. The stock currently has a market cap of $18.69 billion.
PennTex Midstream Partners' share price finished yesterday's trading session at $16.71, sliding 1.59%. A total volume of 21.94 thousand shares exchanged hands, which was higher than the 3 months average volume of 19.28 thousand shares. The stock has advanced 2.86% and 49.87% in the last three months and past six months, respectively. Furthermore, since the start of the year, shares of the company have soared 37.89%. The stock is trading at a PE ratio of 32.96 and has a dividend yield of 6.82%.
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SOURCE: Active Wall Street
