BreitBurn Energy Partners L.P (NASDAQ:BBEP) energizing itself though acquisitions
BreitBurn Energy Partners L.P (NASDAQ:BBEP) had announced that two definitive agreements have been signed to acquire some oil and natural gas properties in Texas’ Permian Basin. These are being acquired for a total price of $190M and will be subject to purchase price adjustments and customary closing conditions, from Lynden USA Inc and CrownRock, L.P. The funding for these acquisitions will come from borrowings under the current bank credit facility that the Partnership has.
Closing some acquisitions
The company also announced today that it has now completed the acquisition of the oil properties and other associated midstream assets situated in the Oklahoma Panhandle from a 100%-owned Whiting Petroleum Corporation subsidiary, Whiting Oil and Gas Corporation. The preliminary adjusted purchase-price was around $846M and included the close to $86M deposit that had been paid previously. These preliminary purchase-price adjustments are essentially interim adjustments. The final adjusted purchase-price will only be determined post-closing and will be subject to the customary post-closing adjustments.
This purchase was made pursuant to the definitive agreement that had been announced on 24 June 2013. The Partnership has also completed the acquisitions that had been announced previously. These included additional interests in some of the assets that had been acquired from some other sellers for an added $30M.
Credit facility flexibility
As per the plan, the Partnership utilized borrowings under the newly-expanded and amended credit facility to fund this transaction. With the inclusion of the entire consideration of this acquisition, the Partnership has around $1.05B in borrowings that are outstanding under the amended credit-facility. The facility has a $1.40B total borrowing capacity. This acquisition leaves the partnership with around $350M of additional borrowing capacity. Under the terms of the amended credit facility, the partnership is expecting to have a combined leverage ratio of around 4.0-to-1, post the closing. The credit facility had been designed in manner so as to accommodate an acquisition of this size without affecting its flexibility.