Midstream

Stonehenge and UGI Acquire Natural Gas Gathering System

Stonehenge-and-UGI-Acquire-Natural-Gas-Gathering-System

Pine Run Gathering, a subsidiary of Stonehenge Energy Resources and UGI Corporation, announced Tuesday it completed the acquisition of Pine Run Midstream, LLC for $205 million.

The transaction was between Pine Run, an affiliate of PennEnergy Resources, and several minority partners. Furthermore, through this acquisition, the Company acquired Pine Run Midstream’s natural gas gathering system.

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Stonehenge and UGI new natural gas gathering system acquisition

Earlier today, Pine Run Gathering announced it completed the acquisition of Pine Run Midstream. In this regard, the Company acquired a new natural gas gathering system. This transaction included Pine Run Gathering’s participation, an affiliate of PennEnergy Resources, and minority partners.

PennEnergy is a Pittsburgh-based independent oil and gas company and a leading Appalachian-based producer. Furthermore, the firm is an anchor customer on the Pine Run system.

Therefore, Stonehenge III is the third partnership between Energy Spectrum Capital and Stonehenge Energy Resources (“Stonehenge”) management. Indeed, the transaction’s financial part will be with equity capital from both Stonehenge III (51%) and UGIES (49%). Besides, a senior secured loan credit facility will fund the transaction.

Currently, Pine Run Midstream operates 43-miles of dry gas. Additionally, the Company gathers pipeline and compression assets located in Butler and Armstrong counties in western Pennsylvania. In fact, since 2014, the Pine Run Midstream system has been active. Thus, Stonehenge will now operate the system. Consequently, Stonehenge and UGI expect the investment to be immediately accretive to earnings.

Pine Run Gathering is Stonehenge’s fourth venture in the Appalachian Basin, the Company said in a press release.

Reception

Accordingly, Patrick Redalen, CEO of Stonehenge, said: “we’re glad to add the Pine Run Midstream system to our operations in western Pennsylvania. Therefore, we view this strategic partnership with UGIES as a practical step to providing area producers with cost-effective, customer-focused services.”  

Furthermore, the CEO added; “The Pine Run Midstream system is a high-quality asset; well managed and operated by the PennEnergy team. Hence, we’re glad to have the chance to expand our relationship with the entire team at PennEnergy.”

Likewise, this is UGI’s second recent investment in Appalachian basin natural gas gathering systems. Therefore, the Company continues to invest in well-positioned assets and highly productive Marcellus Shale areas.

 “We are very pleased to announce this investment, which complements our existing portfolio of midstream assets,” said Robert F. Beard, Executive Vice President – Natural Gas, UGI.

Alignment to the company’s plans

Moreover, “adding our stake in Pine Run Gathering to UGI Appalachia enhances and expands our footprint in western Pennsylvania. Besides, this action is consistent with the strategy we announced in 2019.”

As well, Beard noted, “Pine Run Midstream has direct connectivity to UGI’s Big Pine Pipeline. Therefore, we acquired this asset as part of the Columbia Midstream deal. Moreover, it will be able to capture additional production nearby. Importantly, expansion of our natural gas portfolio enables us to provide low-cost, environmentally responsible energy to more consumers.”

UGIES will add its ownership stake in Pine Run Gathering to UGI Appalachia, LLC, which operates gathering assets in Pennsylvania, Ohio, and West Virginia.

Finally, Joseph L. Hartz, President of UGIES, stated, “Pine Run Gathering is a great addition to our portfolio. For instance, it has a strong operations team in place that fits nicely with our midstream business.”

To sum up, “this asset will accelerate the growth of our existing western Pennsylvania natural gas gathering business and is a great strategic fit for UGIES.”

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