Energy Transfer Partners LP (NYSE: ETP) continues to make connections in Louisiana with its agreement to purchase interests in PennTex Midstream Partners LP (NASDAQ: PTXP) and its general partner.

Since September, Range Resources Corp. (NYSE: RRC) has upended the table in North Louisiana When it bought Memorial Resource Development Corp.’s Terryville Complex assets for $4.2 billion.

Energy Transfer’s $640 million deal can be read as a preemptive strike to head off the loss of what was Memorial Resource’s expiring business contracts in the next few years.

Energy Transfer said the deal is anticipated to be slightly dilutive near-term, but Energy Transfer said the PennTex acquisition brings strategic and operational benefits to its operations in Louisiana.

Commercially, Energy Transfer’s consolidated gathering and processing (G&P) position in the Terryville Field in North Louisiana ran the risk of losing Range to PennTex. Range could have recontracted its production volumes to a PennTex plant after 2018.

Memorial Resource, purchased by Range, held 220,000 net acres in the Terryville producing about 420 million cubic feet equivalent per day.

Range is also PennTex’s primary customer, with contracts that include minimum volume commitments of 460,000 million British thermal units per day of gathering and processing. Range and PennTex also share an agreement that provides the MLP with exclusive rights to build all midstream infrastructure within an area of mutual interest in North Louisiana.

Energy Transfer’s acquisition gives it control of one of the largest G&P players in the Terryville Complex. The company’s assets include 36 miles of gas gathering pipeline, 15 miles of residue gas pipeline and 40 miles of NGL pipeline.

At closing, Energy Transfer will own PennTex’s 92.5% controlling interest in its general partner. Energy Transfer will also own all incentive distribution rights (IDRs) and about 65% of the total limited partner interests in PennTex. Energy Transfer Equity LP (NYSE: ETE) agreed to waive $33 million in annual IDRs—an agreement that will run in perpetuity.

“Given the transaction’s size, we expect that ETP chose to leave a portion of the stock un-acquired for a strategic reason … although the strategy is not readily apparent at this time,” Barclays said in an Oct. 26 report.

Energy Transfer will split the cost of the deal by paying half of the $640 million with common units and half with cash.

Energy Transfer said consolidating its position effectively allows it to be the key beneficiary of a basin with strong drilling economics and proximity to a growing demand market with little basis risk.

Energy Transfer also sees strategic benefit in adding another public MLP as a “growth vehicle.”

The transaction brings another partnership into the fold for the Energy Transfer complex and “with it, further optionality for future inter-partnership M&A [read: dropdowns from ETP to PTXP] and synergistic opportunities,” Barclays said in an Oct. 26 report.

The companies said the agreement is set to close in the fourth quarter.

Credit Suisse acted as the financial adviser to Energy Transfer and Andrews Kurth Kenyon LLP served as legal counsel. PennTex was represented by Latham & Watkins LLP and Wells Fargo Securities LLC served as its financial adviser.

Darren Barbee can be reached at dbarbee@hartenergy.com.