Pipeline operators Regency Energy Partners LP and Crestwood Midstream Partners LP both announced plans to buy peers to expand their pipe networks, as infrastructure companies seek bigger stakes in the U.S. shale oil and gas boom.
Regency Energy agreed to buy PVR Partners LP for about $3.8 billion while Crestwood Midstream is buying privately held Arrow Midstream Holdings for $750 million.
Burgeoning production has left the United States awash in cheap oil and gas but a shortage of pipelines has put a premium on the infrastructure that moves production to refining hubs.
The deals announced on Thursday come a few months after Crestwood, Inergy LP and Inergy Midstream LP merged to form a $7 billion entity to cater to a spurt in Bakken production, which has made North Dakota the most prolific oil-producing state after Texas.
Regency's acquisition of PVR Partners will give it access to the Marcellus and Utica shales in the Appalachian Basin and the Granite Wash in the Mid-Continent region.
Regency, which has assets in the Permian Basin, South Texas and North Louisiana, will offer PVR unitholders $28.68 per unit, a 26 percent premium to the stock's Wednesday close. Regency would also assume $1.8 billion in debt.
PVR units jumped 15.5 percent to $26.34, just below the offer price, on the New York Stock Exchange on Thursday.
The deal, expected to close in the first quarter, will slightly hurt Regency's distributable cash flow in 2014, it said.
In North Dakota's Bakken shale field, Crestwood Midstream will process about 18 percent of crude oil output after it buys Arrow Midstream, making it one of the largest pipeline and storage providers in the fast-growing shale field.
Arrow operates over 460 miles of pipeline in the Bakken, carrying about 50,000 barrels of oil and 15 million cubic feet of natural gas per day.
Crestwood's deal with Arrow is expected to close in the fourth quarter and add to Crestwood's estimated distributable cash flow per limited partner unit in 2014, the company said.
BofA Merrill Lynch and UBS Investment Bank advised Regency, while Baker Botts LLP was its legal counsel.
Citigroup Global Markets Inc and Evercore Partners advised PVR, while Vinson & Elkins LLP was its legal counsel.
Citi was the exclusive financial adviser to Crestwood.