Spectra Energy Partners LP (SEP) said Wednesday it will acquire Atlas Pipeline Partners LP's (APL) NOARK Pipeline System for $300 million in cash.

As tumbling commodity prices and slumping gas demand squeeze small pipeline operators like Atlas Pipeline, Spectra and other large, well-capitalized companies have been on the lookout for bargain buys. Williams Cos. (WMB) said last week it is forming a natural gas gathering and processing joint venture with Atlas Pipeline, in a move that will strengthen Atlas' balance sheet and give Williams a foothold in Appalachia's Marcellus Shale, one of the largest U.S. onshore gas fields.

The Spectra acquisition includes Ozark Gas Transmission LLC, a 565-mile natural gas transmission pipeline system that extends from Oklahoma to Missouri. The system, which connects to Spectra Energy Corp.'s (SE) Texas Eastern Transmission System, links supplies in Oklahoma's Fayetteville Shale and Arkoma Basin to Midwest and Northeast markets.

The acquisition "puts us on much better financial footing," said Brian Begley, vice president of investor relations for Atlas. "We've made significant progress in deleveraging our business."

The deal also includes Ozark Gas Gathering LLC, a 365-mile natural gas gathering system in eastern Oklahoma and western Arkansas. Spectra Energy Partners said it expects the acquisitions to close in the second quarter of 2009.

The purchase makes strategic sense for Spectra because the NOARK system is close to other Spectra-owned pipelines and connects to key gas production areas in the Fayetteville Shale, Spectra Energy Partners spokesman Sean Blakley said.

"We like pipelines with good supply at one end and good markets at the other end," Blakley said.

The NOARK deal will help Atlas pay down debt, but the sale means the company is losing a stable, fee-generating asset, leaving Atlas more exposed to volatile commodity prices, said Selman Akyol, an analyst with Stifel, Nicolaus & Co. in St. Louis.

"We were estimating the assets would sell for $250 million so the incremental $50 million is a plus," Akyol said. "The detriment is the revenues on the NOARK system were fee generated which we viewed as stable, as a result the company's revenues in the future are much more dependent on commodity pricing."

Spectra Energy Partners is a natural gas pipeline and storage operator formed by Spectra Energy out of the former natural gas holdings of Duke Energy Corp (DUK).

Atlas Pipeline Partners shares recently rose 11 cents, or 2.4%, at $4.66. Spectra Energy Partners shares were up 54 cents, or 2.5%, at $22.13.

-By Christine Buurma, Dow Jones Newswires; 201-938-2061; christine.buurma@dowjones.com