Eagle Rock Energy Partners LP has agreed to purchase two natural gas processing plants and a related pipeline system from BP America Production Co. for $227.5 million in cash.
Eagle Rock said Friday that the acquisition of the Sunray and Hemphill processing plants and the 2,500-mile pipeline system will expand its operations in the Texas Panhandle. The plants have a processing capacity of 220 million cubic feet of gas per day.
The sale is expected to close Oct. 1, subject to regulatory approvals and other conditions, according to the Houston company.
When the sale closes, Eagle Rock said the two companies will sign a 20-year, fixed-fee agreement under which Eagle Rock will process natural gas produced by BP from existing wells connected to the system. It also would cover new wells drilled near the pipeline system by BP and its joint venture partners within two years after closing.
Eagle Rock expects the acquisition to add to its distributable cash flow per unit beginning in 2014, subject to market and other conditions. It also expects some cost savings when the assets are combined with its existing operations.
Shares of Eagle Rock rose 1 cent to end at $8.96. In the past 52 weeks, the price has ranged from $8.25 to $11.80.
Shares of BP PLC rose 18 cents to finish at $42.40 and fell 10 cents in after-hours trading. Shares have traded from $33.62 to $48.34 in the past 52 weeks.
