QR Energy Continues Acquisition Spree (QRE)

QR Energy LP (NYSE: QRE) is an independent oil & gas producer that seeks out mature producing fields, buys them, and then tries to make them pay off either by lowering production costs or by effective hedging. In the fourth quarter of 2011, QR Energy completed a $579 million acquisition of assets from its sponsor, Quantum Resources Fund.

The company announced today that it was purchasing another $230 million worth of assets from an unnamed private owner. The assets being acquired currently produce about 1,178 barrels of oil equivalent/day, 93% of which is liquids. The transaction is all cash, nearly all of which will be borrowed. On the company’s annual Form 10-K filed last week, cash and equivalents totaled less than $17.5 million. Here’s what QR said in the press release announcing the acquisition:

The transaction is expected to be financed with cash on hand and borrowings under its bank credit facility. QRE has also secured commitments to provide an additional $200 million of bank loans, which are available to fund the purchase price of the acquisition if necessary. The transaction is expected to close in late April, subject to customary closing conditions.

Shares closed at $22.36 on Friday and are trading down nearly -5% in the pre-market at $21.20 this morning.

Paul Ausick