Notable Mergers and Acquisitions 10/25: (BPL) (PTXP)/(ETP) (LAZ) (CRZO)/(SN)

October 25, 2016 9:45 AM EDT

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*** Buckeye Partners, L.P. (NYSE: BPL) announced that it has signed a definitive agreement to acquire a 50 percent equity interest in VTTI B.V. (“VTTI”), a company that will be jointly owned with Vitol1 for $1.15 billion. VTTI is one of the largest independent global marine terminal businesses that, through its subsidiaries and partnership interests, owns and operates approximately 54 million barrels2 of petroleum products storage across 13 terminals located on five continents. These marine terminals are predominately located in key global energy hubs—including Northwest Europe, the United Arab Emirates and Singapore—and offer world-class storage and marine terminalling services for refined products, liquid petroleum gas and crude oil. A majority of VTTI’s cash flows are supported by take-or-pay storage agreements with Vitol, the largest crude oil and petroleum products trading company in the world. This transaction, which is subject to regulatory approvals and customary closing conditions, is expected to close in early January 2017.

“This investment in VTTI provides immediate access to a stable portfolio of international terminalling and storage assets, as well as an established platform to participate in further attractive growth opportunities across the globe,” stated Clark C. Smith, Chairman, President and Chief Executive Officer. “The interest we are acquiring in VTTI fits well into our growth strategy of investing in terminal assets in strategic energy hubs while further enhancing the logistical solutions available to our customer base across key energy markets. We expect this investment to generate increasing quarterly distributions supported by stable fee-based cash flows. These cash flows are underpinned by commercial agreements with credit worthy customers, anchored by Vitol. We expect this transaction to be immediately accretive to our distributable cash flow per limited partner unit in 2017 with significant accretion growth expected over time.”

Buckeye and Vitol will have equal Board representation and voting rights in VTTI following the closing of the transaction. VTTI will continue to operate as a stand-alone entity and its existing management team and employees will remain in place to operate the assets. “We have been very impressed with the experience and talent of the VTTI senior leadership team and the culture they have developed across VTTI’s global employee base,” continued Mr. Smith. “We are confident VTTI’s unwavering focus on environmental compliance and safety, as well as customer service, positions Buckeye and VTTI for continued growth and success in the future.”

Barclays Capital Inc. acted as the exclusive financial advisor to Buckeye and provided a fairness opinion to the Board of Directors of Buckeye GP LLC, the general partner of Buckeye, in connection with this transaction.

*** Lazard Ltd (NYSE: LAZ) announced the acquisition of the remaining 50 percent of MBA Lazard, its Financial Advisory business in Latin America outside Brazil and Mexico.

The integration of offices in Buenos Aires, Santiago, Bogota, Lima and Panama City with Lazard operations in the U.S., Canada and Brazil creates the largest network of dedicated financial advisory offices in the Americas, in 15 cities across 8 countries. Matias Eliaschev, former MBA Lazard Managing Partner, has been named CEO, Lazard Latin America ex Brazil and Mexico investment banking, effective immediately.

“We expect to see long-term economic growth in the region and increasing strategic activity both into Latin America and outward globally,” said Alex Stern, Chief Executive Officer of Lazard Financial Advisory. “Our colleagues there are highly respected in their communities and trusted advisors to their clients.”

“The 12-year alliance with Lazard has been a great success, and this step is a natural evolution of our relationship,” said Mr. Eliaschev. “We look forward to working even more closely with Lazard’s senior bankers, and the firm’s unmatched global network of relationships, to serve clients in South and Central America.”

The Lazard Latin American team’s deep bench of senior advisory expertise includes Gregorio Charnas and Santiago Alsina in Argentina; Jose Luis Jeria in Chile; Jaime Bermudez and Natalia Ramirez in Colombia; Maria Jesus Hume in Peru; and Julianne Canavaggio in Panama. Alejandro Reynal, founder and former Chairman of MBA Lazard, will become a Senior Advisor to Lazard.

MBA was established in 1981 as an independent advisory boutique based in Buenos Aires. Lazard and MBA formed an alliance in 2004 to provide cross-border advisory services to Lazard clients investing in Argentina and to MBA clients investing abroad. MBA expanded in South America and in January 2008, the firms reinforced the alliance with Lazard acquiring 50 percent of the MBA Group and rebranding the firm as MBA Lazard.

*** PennTex Midstream Partners, LP (Nasdaq: PTXP) (the “Partnership”) announced that PennTex Midstream Partners, LLC (“PennTex Development”) has entered into a Contribution Agreement with Energy Transfer Partners, L.P. (NYSE: ETP), NGP X US Holdings, L.P. and the other contributors party thereto (the “Contribution Agreement”). PennTex Development owns a controlling 92.5% interest in PennTex Midstream GP, LLC (the “General Partner”), the general partner of the Partnership.

Pursuant to, and subject to the terms and conditions of, the Contribution Agreement, ETP has agreed to acquire (i) 100% of the membership interests in PennTex Development; (ii) 6,301,596 common units representing limited partner interests in the Partnership and 20,000,000 subordinated units representing limited partner interests in the Partnership; (iii) 100% of the membership interests in the General Partner; and (iv) 100% of the Partnership’s incentive distribution rights.

The transactions contemplated by the Contribution Agreement are expected to close during the fourth quarter of 2016, subject to customary closing conditions. Upon the completion of the transactions contemplated by the Contribution Agreement, ETP will own the general partner of, and will control, the Partnership, and will own approximately 65% of the outstanding limited partner interests in the Partnership.

PennTex Development was represented by Latham & Watkins LLP on the transaction and Wells Fargo Securities, LLC served as financial advisor.

PTXP Third Quarter 2016 Distribution

The Partnership also announced today that the Board of Directors of the General Partner has approved a cash distribution of $0.2950 per unit, or approximately $1.18 per unit on an annualized basis, for the third quarter 2016. The distribution will be paid on November 14, 2016 to unitholders of record as of November 7, 2016.

This quarterly distribution represents an increase of $0.0104 per unit, or approximately 3.7%, over the Partnership’s distribution of $0.2846 per unit for the quarter ended June 30, 2016.

*** Carrizo Oil & Gas, Inc. (Nasdaq: CRZO) announced that it has agreed to acquire Eagle Ford Shale properties from an affiliate of Sanchez Energy Corporation (NYSE: SN) for $181 million in cash, subject to customary closing adjustments. Additionally, Carrizo is providing estimated third quarter production.

Acquisition Highlights

  • Approximately 15,000 net bolt-on acres located primarily in the core volatile oil window of the Eagle Ford Shale in LaSalle, Frio, and McMullen counties, TX
  • Estimated net production during September of approximately 3,100 Boe/d (61% oil) from 112 gross (93 net) wells
  • Net proved reserves, based on the Company’s internal estimates, of 14.5 MMBoe (71% oil, 56% developed)
  • Approximately 80 net de-risked drilling locations based on a single layer development in the Lower Eagle Ford Shale, with additional upside potential from stagger-stack development, infill drilling, and additional zones
  • Acreage is 100% operated with no additional drilling requirements

On October 24, 2016, Carrizo signed a purchase and sale agreement to acquire approximately 15,000 net acres located primarily in the volatile oil window of the Eagle Ford Shale. Following the closing of the transaction, Carrizo will hold over 100,000 net acres in the Eagle Ford Shale, concentrated in LaSalle, McMullen, and Atascosa counties. Based on the Company’s current development spacing assumptions, which include only a single layer within the Lower Eagle Ford Shale, the acquisition increases Carrizo’s drilling inventory in the play to approximately 1,100 net locations.

The transaction has an effective date of June 1, 2016, and is currently expected to close by mid-December, 2016. Carrizo plans to fund the acquisition with the proceeds from a separately-announced equity financing.

S.P. “Chip” Johnson, IV, Carrizo’s President and CEO, commented, “We are pleased to announce this bolt-on acquisition in the Eagle Ford Shale, as it increases our acreage position in the play by more than 15% and expands our Core inventory in it by approximately 10%, with additional upside possible from a combination of infill drilling and multi-zone development. A number of the acquired properties are also contiguous with our Core acreage position, which should allow us to capitalize on efficiencies such as the ability to drill longer lateral wells from our existing leasehold. In addition to the increased inventory and potential operational efficiencies, we also believe the transaction is accretive on a variety of financial metrics, including cash flow and earnings per share.”

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