UPDATE: Stifel Upgrades Southcross Energy Partners LP On News Of TexStar Agreement


In a report published Friday, Stifel analyst Selman Akyol upgraded the rating on Southcross Energy Partners LP (NYSE: SXE) from Hold to Buy, and named a $23.50 price target.

In the report, Stifel noted, “The partnership announced it entered into a definitive agreement to combine with TexStar Midstream Services LP, a privately held gas gathering and processing partnership.

"TexStar's assets consist of 300 MMcf/d processing capacity, 63,000 Bbls/d of fractionation capacity and 885 miles of pipeline located in the Eagle Ford. Through a series of transactions, SXE will own TexStar' Rich Gas System which includes 300 MMcf/d processing plant and 230 miles of rich natural gas pipelines with 300 MMcf/d capacity for $450 million.

"The transaction will be financed with $180 million in cash via SXE's newly formed credit revolver with capacity of $570 million and 14.6 million of payment-in-kind (PIKs) units. We expect the transaction to close in 3Q14.”

Southcross Energy Partners LP closed on Thursday at $21.16.

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