Stonehenge and UGI Acquire Pine Run Midstream Natural Gas Gathering System
February 16 2021 - 8:30AM
Business Wire
Pine Run Gathering LLC (“Pine Run Gathering”) announced today
that it has completed a transaction to acquire Pine Run Midstream,
LLC (“Pine Run Midstream”) from an affiliate of PennEnergy
Resources, LLC (“PennEnergy”) and minority partners for $205
million. Pine Run Gathering is a joint venture owned by a
subsidiary of Stonehenge Energy Resources III, LLC (“Stonehenge
III”), a portfolio company of Energy Spectrum Partners VIII LP, and
by a subsidiary of UGI Energy Services, LLC (“UGIES”), which is a
subsidiary of UGI Corporation (NYSE: UGI).
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PennEnergy, a Pittsburgh-based independent oil and gas company,
is a leading Appalachian based producer and anchor customer on the
Pine Run system. Stonehenge III is the third partnership between
Energy Spectrum Capital and Stonehenge Energy Resources
(“Stonehenge”) management. The transaction will be financed with
equity capital from both Stonehenge III (51%) and UGIES (49%) as
well as a senior secured loan credit facility.
Pine Run Midstream operates 43-miles of dry gas gathering
pipeline and compression assets located in Butler and Armstrong
counties in western Pennsylvania. The Pine Run Midstream system has
been in operation since 2014 and will be operated by Stonehenge.
Stonehenge and UGI expect the investment to be immediately
accretive to earnings.
Pine Run Gathering is Stonehenge’s fourth venture in the
Appalachian basin. “Stonehenge is pleased to add the Pine Run
Midstream system to our operations in western Pennsylvania and
views the strategic partnership with UGIES as a beneficial step to
providing area producers with cost-effective, customer-focused
services,” said Patrick Redalen, CEO of Stonehenge. “The Pine Run
Midstream system is a high-quality asset that has been well managed
and operated by the PennEnergy team. We are very pleased to have
the chance to expand our relationship with Rich, Greg and the
entire team at PennEnergy.”
This is the second recent investment in Appalachian basin
natural gas gathering systems by UGIES as it continues to invest in
assets well positioned in highly productive areas of the Marcellus
Shale. UGIES will add its ownership stake in Pine Run Gathering to
UGI Appalachia, LLC, which operates gathering assets in
Pennsylvania, Ohio and West Virginia. “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. “Adding our stake in Pine Run
Gathering to UGI Appalachia enhances and expands our footprint in
western Pennsylvania and is consistent with the strategy outlined
when we announced our acquisition of Columbia Midstream Group in
2019. Pine Run Midstream has direct connectivity to UGI’s Big Pine
Pipeline, which is one of the assets acquired as part of the
Columbia Midstream deal, and is well positioned to capture
additional production nearby. Importantly, expansion of our natural
gas portfolio enables us to provide low-cost, environmentally
responsible energy to more consumers.”
Joseph L. Hartz, President of UGIES, stated, “Pine Run Gathering
is a great addition to our portfolio. It is well run and has a
strong operations team in place that fits nicely with our midstream
business.” Hartz added, “This asset will accelerate the growth of
our existing western Pennsylvania natural gas gathering business
and is a great strategic fit for UGIES.”
In connection with the transaction, Baker Botts L.L.P. served as
legal counsel for Pine Run Gathering and Winston & Strawn LLP
served as legal counsel for PennEnergy.
Tudor, Pickering, Holt & Co. served as financial advisor for
PennEnergy.
About Stonehenge
Headquartered in Westminster, CO and backed by Energy Spectrum
Capital, Stonehenge Energy Resources is a private energy company
focused on building, owning and operating midstream facilities in
the Appalachian basin to support its producer-partners in the
optimum development of their resources. Formed in 2007, Stonehenge
supported the early Appalachian unconventional shale gas
development by gathering and processing NGL-rich gas in Butler
County, Pennsylvania. Stonehenge currently operates two natural gas
gathering systems in Butler, Clarion and Armstrong Counties,
Pennsylvania. For more information about Stonehenge, visit
www.stonehengeenergy.com.
About UGI Corporation
UGI Corporation is a distributor and marketer of energy products
and services. Through subsidiaries, UGI operates natural gas and
electric utilities in Pennsylvania, distributes LPG both
domestically (through AmeriGas) and internationally (through UGI
International), manages midstream energy assets in Pennsylvania,
Ohio and West Virginia and electric generation assets in
Pennsylvania, and engages in energy marketing, including renewable
natural gas, in twelve states and the District of Columbia and
internationally in France, Belgium, the Netherlands and the UK.
Comprehensive information about UGI Corporation is available on
the Internet at https://www.ugicorp.com.
About Energy Spectrum Capital
Founded in 1995, Energy Spectrum Capital is a Dallas,
Texas-based venture capital firm that makes direct investments in
well-managed, lower-middle-market companies that acquire, develop
and operate energy infrastructure assets in North America. Since
inception, Energy Spectrum has raised more than $4.5 billion of
equity capital across eight funds. For more information, please
visit www.energyspectrum.com.
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STONEHENGE MEDIA CONTACT Pat Redalen Chief Executive
Officer (303) 829-6221 predalen@stonehengeenergy.com
UGI MEDIA CONTACT 610-337-1000 Tameka Morris, ext.
6297 Arnab Mukherjee, ext. 7498
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