Holders of Houston-based QR Energy will get 0.9856 of a Breitburn unit for every QR unit they own, the companies said today in a joint statement. That’s about $22.48 a share, a 19 percent premium based on yesterday’s closing prices. Holders of QR Class C convertible units will receive an aggregate $350 million cash.
The combined partnership’s production will average the equivalent of 57,300 barrels per day, 67 percent of it oil and other petroleum liquids based on second-quarter results, according to today’s statement. The deal is expected to close late this year or early next.
“This combination creates an unrivaled operator of mature assets with exposure to nearly every conventional basin in the U.S.,” QR Energy Chief Executive Officer Alan Smith said in the statement. “Breitburn has a proven 26 year track record of making big oil fields bigger.”
Breitburn plans to increase its annual payout to $2.08 a unit from $2.01 using additional cash flow from QR Energy’s wells.
Breitburn, based in Los Angeles, is organized as a master-limited partnership. MLPs pay no federal income tax and distribute most of their cash to shareholders. Today’s deal will make Breitburn the largest oil-weighted upstream oil and gas MLP, according to the statement.
UBS AG advised Breitburn and provided a fairness opinion to its board. Royal Bank of Canada’s capital markets unit and Greenhill & Co. advised QR Energy.
To contact the editors responsible for this story: Simon Casey at email@example.com Jim Efstathiou Jr., Tina Davis