* Regency Energy to buy PVR Partners for $3.8 bln
* $28.68/unit offer at 26 pct premium to PVR's Wednesday close
* 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 Energy Partners LP and Crestwood Midstream Partners LP 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, controlled by billionaire Kelcy Warren's Energy Transfer Equity LP, agreed to buy PVR Partners LP for about $3.8 billion. 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.
Pipeline companies have also been attracting investors as they are mostly structured as master limited partnerships (MLPs). They pay virtually no corporate taxes and have a lower cost of capital, giving them the opportunity to hunt for less attractively valued assets.
"It's a seller's market for MLP-qualifying assets. The market's desire for MLP-qualifying assets is enormous," said Robert W. Baird & Co analyst Ethan Bellamy.
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 shale production, which has made North Dakota the most prolific oil-producing state after Texas.
Other partnerships such as Southcross Energy Partners LP and Eagle Rock Energy Partners LP could also benefit from deals, Bellamy said.
TAPPING THE SHALE BOOM
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 will also assume $1.8 billion in debt.
PVR units were trading at $25.81 - well below the offer price.
PVR Partners, which was owned by Penn Virginia Corp, has had trouble with producers delaying well connections to its pipelines. Analysts have said its $1 billion acquisition of Chief 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 in 2014.
Regency units were down 7 percent at $25.99 in afternoon trading on the New York Stock Exchange.
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 lucrative shale formation.
"This is a perfect example of how we are going to aggressively commercially develop and look for bolt-on opportunities ... ," Crestwood Chief Executive Robert Phillips said on a conference call with analysts.
Arrow operates more than 460 miles of pipeline in the Bakken, carrying about 50,000 barrels of oil and 15 million cubic feet of natural gas per day.
The 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.
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 advised PVR. Vinson & Elkins LLP was its legal counsel.
Citi was the exclusive financial adviser to Crestwood, while Arrow was advised by Jefferies LLC.