A Los Angeles partnership has agreed to acquire Houston’s QR Energy in a $1.6 billion stock deal that the companies said Thursday will create the nation’s largest upstream-focused master limited partnership.
QR Energy and the acquiring company, Breitburn Energy Partners, valued the combined companies’ total enterprise value at $7.8 billion, with second-quarter daily production of 57,300 barrels of oil equivalent.
They valued the deal at $3 billion including QR Energy’s debt and outstanding Class C convertible preferred units.
Master limited partnerships are tax-advantaged corporate structures that typically offer regular cash payouts to investors called unit-holders.
The companies said QR Energy unit-holders will receive 0.9856 of a Breitburn unit for each unit of QR Energy they hold, which the companies valued at $22.48 per unit based on Breitburn’s Wednesday closing price of $22.81.
QR Energy units closed Wednesday at $18.87, and rose $1.72 to $20.59 in New York Stock Exchange trading Thursday. Breitburn units fell 58 cents to $22.23 on the Nasdaq.
The companies said they expect the deal to close late this year or early in 2015, subject to approval by regulators and QR Energy unit-holders.
Breitburn senior management will run the merged companies, but plans to retain QR Energy’s engineering, operational and support personnel, according to a news release announcing the deal.
The merger will combine QR Energy’s portfolio of producing and non-producing U.S. properties with Breitburn’s assets in
Michigan, Oklahoma, Texas, Wyoming, California, Florida, Indiana and Kentucky.
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