Oppenheimer Reiterates Outperform Rating On RGNC

Oppenheimer is reiterating its Outperform rating on Regency Energy Partners LP

after the announcement of a JV with Energy Transfer Partners

and concurrent acquisition of Dreyfus NGL assets for $578M (net). “The asset package is attractive and strategically located,” Oppenheimer writes. “While we are somewhat concerned about the multiple paid for the assets, we believe the economics for RGNC work in a range of multiples due to its lower cost of capital. “We believe the deal will be 1-3% accretive to DCFPU if completed between 10x and 12x EBITDA. This excludes the economics from potential organic growth projects related to the acquired assets. Importantly, RGNC has already privately placed the equity needed to finance the deal with Kayne, Tortoise and Fiduciary.” Regency Energy Partners closed Wednesday at $26.24.