Mountaineer serves nearly 215,000 customers across 50 of West Virginia’s counties
UGI, a Pennsylvania-based energy products distributor, has entered into an agreement to acquire Mountaintop Energy, the owner of Mountaineer Gas Company, a local gas distribution company in West Virginia for an enterprise value of $540m.
The enterprise value includes the assumption of debt of nearly $140m.
For UGI, the acquisition fits within its strategy to focus on growth investments in natural gas and renewable energy solutions. The deal is expected to increase its regulated utility rate base and its customers by nearly 14% and 30% respectively.
Mountaineer is a fully regulated company, with a system of nearly 6,000 miles (9,656km) of distribution, transmission and gathering pipelines.
It currently serves nearly 215,000 customers across 50 of the 55 counties in West Virginia. A 90% of the company’s customer base is residential and the remaining 10% are commercial and industrial customers.
UGI president and CEO John Walsh said: “We are very pleased to announce this important transaction and expand our core utility operations in the mid-Atlantic region. The transaction is immediately accretive to adjusted EPS and provides us with an opportunity to support our customers in West Virginia with a long-term commitment to ensure safe, reliable, affordable, and environmentally responsible natural gas services.
“Our existing Utilities business has shown the value of this long-term commitment to system enhancement and we expect to make a similar commitment in West Virginia. We see significant investment opportunities to continue, if not accelerate, the replacement of over 1,500 miles of bare steel pipelines and expand the reach of natural gas in West Virginia to both unserved and underserved areas.
“These investments will improve the safety and reliability of the distribution system and align with our environmental efforts to lower methane and other GHG emissions. We expect Mountaineer’s rate base to grow by a compound annual growth rate of approximately 10% – 12% over the long term.”
As per the gas distribution company, Mountaineer provides a secure platform for growth with regulated investment opportunities in the coming decades to improve safety and reliability of distribution system.
The deal is subject to customary regulatory and other closing conditions including approval from the Public Service Commission of West Virginia. With the fulfilment of all conditions, it is expected to close in the second half of this year.