Columbia Midstream Group is a midstream operator in Appalachian Basin, which has stakes in five natural gas gathering systems
Image: TC Energy to sell its US midstream assets held by Columbia Midstream Group to UGI. Photo: courtesy of rawpixel/Pixabay.
UGI, a Pennsylvania-based energy distribution company, has agreed to acquire the US midstream assets held by TC Energy’s subsidiary Columbia Midstream Group (CMG), for about $1.275bn (£1.01bn).
The acquisition will be executed by UGI’s subsidiary UGI Energy Services.
Midstream assets of Columbia Midstream Group
Columbia Midstream Group, which is focused in the Appalachian Basin, has ownership in four natural gas gathering systems and a stake in a company that has gathering, processing and liquids assets. The assets involved in the deal connect production to markets across western Pennsylvania, northern West Virginia and eastern Ohio.
The five gathering systems of Columbia Midstream Group, which are located in the southwestern core of the Appalachian Basin, have capacity of around 2,675,000 MMBtu/day and 386km of pipeline. The assets include the Gibraltar and Buffalo Creek System, the Hickory Bend Gathering System, the Majorsville Gathering System, the Big Pine Gathering System and the East Washington Gathering System.
The transaction excludes any interest in Columbia Energy Ventures (CEVCO), which is the minerals business of TC Energy (formerly TransCanada) in the Appalachian basin.
TC Energy president and CEO Russ Girling said: “The sale of Columbia Midstream Group advances our ongoing efforts to prudently fund our industry-leading portfolio of high-quality natural gas pipeline, liquids pipelines and power generation projects, while maximizing value for our shareholders.
“Along with the sale of Coolidge and partial monetization of Northern Courier we now expect to realize approximately Cdn$3.4 billion of proceeds from announced portfolio management activities in 2019.”
For UGI, the transaction is expected to significantly expand its midstream portfolio. The company expects its subsidiary UGI Energy Services to become a major operator of midstream assets in the Marcellus and Utica production region spanning across northeastern and western Pennsylvania, eastern Ohio, and the panhandle of West Virginia.
Furthermore, the acquisition will diversify the business by providing UGI Energy Services access to wet gas gathering and processing, while growing the company’s base of business partners and customers.
UGI president and CEO John Walsh said: “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 CMG assets fit nicely into our strategy and further support our long-term commitments to shareholders of 6% – 10% adjusted EPS growth and 4% dividend growth.”
The transaction, which is subject to closing adjustments and customary regulatory approvals, is anticipated to be completed in the third quarter of 2019.
Earlier this year, UGI agreed to acquire a stake of around 75% it does not own in retail propane marketer AmeriGas Partners for $2.44bn (£1.93bn).