UGI subsidiary to expand midstream portfolio with acquisition

July 16, 2019 By    

UGI Energy Services, a subsidiary of AmeriGas parent UGI Corp., agreed to acquire the equity interests of Columbia Midstream Group from a subsidiary of TC Energy Corp. for about $1.275 billion.

UGI Corp. says the acquisition positions UGI Energy Services as a significant operator of midstream assets across the Marcellus and Utica production region from northeastern Pennsylvania through western Pennsylvania, eastern Ohio and the panhandle of West Virginia. Columbia holds five gathering systems, with capacity of roughly 2.7 million Btu per day and 240 miles of pipeline, located in the southwestern core of the Appalachian Basin.

“We are very pleased to announce this important transaction as we continue to build a midstream business of scale,” says John L. Walsh, president and CEO of UGI. “This transaction expands our midstream capabilities in the prolific gas producing region of the southwest Appalachian Basin and provides an initial investment into both wet gas gathering and processing. The [Columbia Midstream Group] assets fit nicely into our strategy and further support our long-term commitments to shareholders of 6 percent to 10 percent adjusted [earnings-per-share] growth and 4 percent dividend growth.”

The transaction is consistent with UGI’s intention to invest in natural gas assets as it utilizes the enhanced free cash flow following the previously announced AmeriGas merger. The transaction also creates synergies that will benefit UGI Energy Services’ midstream and retail marketing businesses as well as procurement opportunities for AmeriGas, the company adds.

“Columbia Midstream Group is a well-run organization with a solid portfolio of strategic assets that enhance and build upon our existing business,” says Robert F. Beard, executive vice president, natural gas of UGI. “We believe this acquisition is a great fit strategically, operationally and culturally, and are excited to welcome the [Columbia Midstream Group] employees to the UGI family of companies.”

The transaction is expected to close in UGI’s fiscal fourth quarter and is subject to customary regulatory and other closing conditions.

*Featured image: iStock.com/designer491

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About the Author:

Brian Richesson is the editor in chief of LP Gas Magazine. Contact him at brichesson@northcoastmedia.net or 216-706-3748.

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