Regency Energy Partners LP (RGP) announced that it has sold 14.4 million common units to ETE Common Holdings, LLC, a wholly owned subsidiary of Energy Transfer Equity, L.P. (ETE), which owns the general partner of Regency, for $400 million. The partnership would use the proceeds from the issuance to pay down borrowings on a revolving credit facility, redeem notes and for general partnership purposes.
On May 15, the partnership paid a cash distribution of 48 cents per outstanding common unit for the first-quarter ended March 31. This distribution is equivalent to $1.92 per outstanding common unit on an annual basis.
Regency is a growth-oriented master limited partnership engaged in the gathering and processing, compression, treating and transportation of natural gas and the transportation, fractionation and storage of natural gas liquids. It operates in Texas, Louisiana, Oklahoma and Kansas. The partnership in the first quarter witnessed strong performance owing to significant volume growth in its gathering and processing and NGL services businesses.
Lately, Regency has been focusing on both organic and inorganic growth. In the first quarter, the partnership incurred $188 million of growth capital expenditures, of which $83 million was for the Gathering and Processing segment, $80 million for the Contract Services segment, $23 million for the NGL Services segment and $2 million for the Transportation segment.
Overall in 2014, Regency expects to invest approximately $1.2 billion in growth capital expenditures. Of this, $860 million will be allotted to the Gathering and Processing segment for expenditures related to growth projects, $250 million will be allotted to the NGL Services segment and $110 million to the Contract Services segment.
Regency Energy currently holds a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can look at better-ranked players in the energy sector like CVR Refining, LP (CVRR) and Matrix Service Company (MTRX). Both stocks sport a Zacks Rank #1 (Strong Buy).
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