Energy Transfer Partners steadily strengthens its pipeline

PVR Partners L.P. has long suffered an identity problem tied to its convoluted ownership structure.

PVR was spun off in 2001 from Penn Virginia Corp., a Main Line natural resources company with 19th-century roots in Appalachian coal and timber.

Then known as Penn Virginia Resources, PVR Partners inherited the firm's coal, timber, and pipeline operations. Penn Virginia Corp. focused on oil and gas exploration.

To muddle matters more, there was a third company for a time, Penn Virginia GP Holdings L.P., through which Penn Virginia Corp. controlled PVR. All traded their shares or ownership units under maddeningly similar names and ticker symbols.

In 2010, in an act of mercy to investors, two of the companies merged and became PVR. The separation of PVR and Penn Virginia was complete, though they remained neighbors in the Radnor Corporate Center.

"Now it's very simple," said Stephen R. Milbourne, the director of investor relations for PVR.

Except now it gets complicated again.

PVR, under the leadership of CEO William H. Shea, has transformed itself into a regional player in the burgeoning "midstream" sector of the natural gas industry.

Midstream companies collect and purify gas from producers, then deliver it through pipeline networks to the interstate trunklines that move it to market. In the nation's shale-gas boom, midstream companies occupy a critical, though low-profile, space.

PVR's value increased as it expanded its position in the Marcellus Shale region and in Oklahoma. Last month, it announced a merger with Regency Energy Partners L.P., a bigger midstream company from Dallas.

PVR unit holders will receive 1.02 units of Regency Energy when the merger is completed early next year. The deal values PVR at $3.4 billion.

PVR will disappear from the Philly 50, as will its Radnor headquarters, where about 20 of its 305 employees are based.

PVR employees are naturally apprehensive. On Wednesday the company sent out a memo announcing retention bonuses of up to 12 months' salary to encourage employees to stick around.

One employee out of a job is Shea, PVR's chief executive and a veteran of the oil and gas pipeline business.

Regency was formed 10 years ago. Since 2010, it has been controlled by an affiliate of Energy Transfer Partners (ETP).

This is where it gets complicated.

ETP is a Dallas company with extensive oil and gas pipeline interests. Last year, it bought Sunoco Inc., the Philadelphia fuel retailer. ETP's main interest was to acquire control of Sunoco Logistics L.P., the pipeline operator that is growing along with the domestic oil and gas boom.

In effect, ETP has taken control of two Philadelphia companies in the last year - Sunoco Inc. and PVR.

Said PVR's Milbourne: "Now we become something like cousins to Sunoco Logistics."

Full disclosure: PVR's board includes Robert J. Hall, Inquirer publisher.