UGI's Stake in Pine Run's $120M Acquisition Expands Appalachian Midstream Operations

Pine Run Gathering Expands Midstream Operations with Major Acquisition

Pine Run Gathering LLC has finalized its acquisition of Superior Midstream Appalachian, LLC for $120 million, a strategic move that significantly enhances its operational footprint in the Appalachian region. This acquisition, fully financed through debt, demonstrates Pine Run's commitment to expanding its midstream capabilities. The joint venture is primarily owned by Stonehenge Energy Resources III, LLC, which holds a 51% interest, and UGI Corporation’s subsidiary, UGI Energy Services, LLC, with a 49% stake. The deal reflects a growing trend in the energy sector where companies are consolidating resources to optimize operational efficiencies and extend their service capabilities.

Superior Midstream operates three key gathering systems in Pennsylvania: Pittsburgh Mills, Snow Shoe, and Brookfield. These systems together have the capacity to manage approximately 190 million cubic feet of natural gas daily. Notably, the Pittsburgh Mills system is interconnected with UGI Energy Services’ Big Pine gathering system, creating significant operational synergy between the two entities. This connection not only enhances the efficiency of gas transportation but also strengthens UGI's position in the competitive midstream market. The acquisition aligns with UGI's strategic goals of expanding its infrastructure and operational reach from producers directly to end-use customers.

Both Patrick Redalen, President & CEO of Stonehenge, and Bob Flexon, President & CEO of UGI Corporation, express optimism over the acquisition. Redalen emphasizes the acquisition's alignment with a positive outlook for the energy sector, while Flexon highlights the expansion of midstream capabilities as a critical component of their growth strategy. With this acquisition, Stonehenge now operates five natural gas gathering systems across western and central Pennsylvania, further solidifying its presence in the Appalachian basin and enhancing its ability to meet the region's energy demands.

In addition to expanding its operational capacity, the acquisition signals a broader commitment from both companies to explore growth opportunities within the midstream sector. Legal representation for the transaction was managed by Baker Botts L.L.P. and Vinson & Elkins LLP, with BOK Financial serving as the Administrative Agent. Cadence Bank and Citizens Bank acted as Joint Lead Arrangers, facilitating the financial aspects of this significant deal.

This acquisition not only enhances Pine Run's market position but also reflects the ongoing evolution of the midstream energy landscape. As the demand for efficient natural gas transportation continues to rise, the integration of these gathering systems positions UGI and Stonehenge as key players in the Appalachian energy market, poised for future growth and operational success.