* Regency Energy to buy PVR Partners for $3.8 bln
* $28.68/unit offer at 26 pct premium to PVR's Wednesdayclose
* PVR shares trading well below offer, Regency down 7 pct
* Crestwood to buy Arrow Midstream for $750 mln
By Swetha Gopinath and Garima Goel
Oct 10 (Reuters) - Pipeline operators Regency EnergyPartners LP and Crestwood Midstream Partners LP announced plans to buy peers to expand their pipe networks asinfrastructure companies seek bigger stakes in the U.S. shaleoil and gas boom.
Regency Energy, controlled by billionaire Kelcy Warren'sEnergy Transfer Equity LP, agreed to buy PVR Partners LP for about $3.8 billion. Crestwood Midstream is buyingprivately held Arrow Midstream Holdings for $750 million.
Burgeoning production has left the United States awash incheap oil and gas but a shortage of pipelines has put a premiumon the infrastructure that moves production to refining hubs.
Pipeline companies have also been attracting investors asthey are mostly structured as master limited partnerships(MLPs). They pay virtually no corporate taxes and have a lowercost of capital, giving them the opportunity to hunt for lessattractively valued assets.
"It's a seller's market for MLP-qualifying assets. Themarket's desire for MLP-qualifying assets is enormous," saidRobert W. Baird & Co analyst Ethan Bellamy.
The deals announced on Thursday come a few months afterCrestwood, Inergy LP and Inergy Midstream LP merged to form a $7billion entity to cater to a spurt in Bakken shale production,which has made North Dakota the most prolific oil-producingstate after Texas.
Other partnerships such as Southcross Energy Partners LP and Eagle Rock Energy Partners LP could alsobenefit from deals, Bellamy said.
TAPPING THE SHALE BOOM
Regency's acquisition of PVR Partners will give it access tothe Marcellus and Utica shales in the Appalachian Basin and theGranite Wash in the Mid-Continent region.
Regency, which has assets in the Permian Basin, South Texasand North Louisiana, will offer PVR unitholders $28.68 per unit, a 26 percent premium to the stock's Wednesday close. Regencywill also assume $1.8 billion in debt.
PVR units were trading at $25.81 - well below the offerprice.
PVR Partners, which was owned by Penn Virginia Corp,has had trouble with producers delaying well connections to itspipelines. Analysts have said its $1 billion acquisition ofChief Gathering LLC also did pan out as planned.
The Regency deal, expected to close in the first quarter,will slightly hurt the company's distributable cash flow in2014.
Regency units were down 7 percent at $25.99 in afternoontrading on the New York Stock Exchange.
In North Dakota's Bakken shale field, Crestwood Midstreamwill process about 18 percent of crude oil output after it buysArrow Midstream, making it one of the largest pipeline andstorage providers in the lucrative shale formation.
"This is a perfect example of how we are going toaggressively commercially develop and look for bolt-onopportunities ... ," Crestwood Chief Executive Robert Phillipssaid on a conference call with analysts.
Arrow operates more than 460 miles of pipeline in theBakken, carrying about 50,000 barrels of oil and 15 millioncubic feet of natural gas per day.
The deal with Arrow is expected to close in the fourthquarter and add to Crestwood's estimated distributable cash flowper limited partner unit in 2014, the company said.
Crestwood's shares were down marginally at $22.77.
BofA Merrill Lynch and UBS Investment Bank advised Regency,while Baker Botts LLP was its legal counsel.
Citigroup Global Markets Inc and Evercore Partners advisedPVR. Vinson & Elkins LLP was its legal counsel.
Citi was the exclusive financial adviser to Crestwood, whileArrow was advised by Jefferies LLC.
- Mergers, Acquisitions & Takeovers