logo
Share SHARE
FONT-SIZE Plus   Neg

Penn Virginia Resource To Buy Chief Gathering For $1 Bln In Cash, Units

Penn Virginia Resource Partners, L.P. (PVR) on Tuesday said it has signed a definitive agreement to acquire Chief Gathering LLC, a midstream pipeline company, for $1.0 billion in cash and special units to expand in the gas-rich Marcellus Shale. The deal is expected to close in the second quarter.

Chief Gathering is owned by Chief E&D Holdings LP. Its assets include six natural gas gathering systems serving over 300,000 dedicated acres in Bradford, Lycoming, Sullivan, Susquehanna, Wyoming and Greene Counties, Pennsylvania and Preston County, West Virginia.

It is currently constructing a new 750 MMcfd trunkline, extending from northern Wyoming County to Luzerne County with a connection to Transco's interstate pipeline. The trunkline is expected to be in service in the third quarter.

PVR currently owns two gathering systems in Lycoming and Wyoming Counties and a third system is in early stage development in Susquehanna County.

Commenting on the deal, William Shea, Jr., CEO of PVR's general partner, said, "We expect that by year-end 2013 our midstream business unit will account for almost 75% of PVR's EBITDA, up from 40-45% today. These assets, together with our Lycoming and Wyoming County gathering assets, position us well to capture significant midstream opportunities in six of the most prolific counties in the northeastern area of the Marcellus Shale."

The company expects substantial operating synergies and capital cost savings from the deal due to the proximity of the PVR and Chief Gathering systems, as well as the connectivity to the Transco and Tennessee interstate pipelines.

As of February, volumes on the Chief Gathering systems were about 235 MMcfd and volumes on PVR's Marcellus systems were around 210 MMcfd. The new Wyoming County trunkline has 15-year firm transportation volume commitments of 255 MMcfd for 2012 and 355 MMcfd for 2013.

PVR expects to capture additional volumes from producers due to the synergies and delivery options from the deal.

The purchase price will be paid through cash and the issuance of $200 million in a new class of PVR limited partner interests to Chief. The special units are similar to PVR common units, but will not pay or accrue distributions until they automatically convert to common units.

PVR expects to finance the purchase, reflecting a January 1, 2012 economic effective date of the acquisition, through a combination of committed equity and debt.

PVR closed on Monday at $22.36, up from the prior close of $22.74, on a volume of 358,900 shares.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

Business News

Editors Pick
A new species of 'super-armored' worm, almost bizarre beyond description, has been discovered. Good thing this one's no longer around. Stocks moved sharply lower over the course of the trading day on Monday amid continued concerns about Greece and the possibility the debt-laden country will exit the eurozone. With the steep drop on the day, the Dow fell to its lowest closing level in almost five months. The most "American" vehicle isn't Built Ford Tough. It's not in jingles sung by John Mellencamp or Bob Seger, and it probably isn't kickin' up backroads dust somewhere in the Heartland.
comments powered by Disqus
Follow RTT