UGI Buying $1.28B Columbia Midstream Assets from TC Energy

(P&GJ) – TC Energy said it has agreed to sell some of its Columbia Midstream assets in the Appalachian Basin to energy distributor UGI Corporation for $1.28 billion.

(photo: TC Energy)

The acquisition significantly expands UGI’s midstream portfolio and provides an opportunity to invest an additional $300 - $500 million over the next five years, the company said. Columbia Midstream Group holds five natural gas gathering systems with capacity of roughly 2,675,000 MMBtu/day and 240 miles of pipeline in the southwestern core of the Appalachian Basin.

TC Energy, formerly Transcanada, said the sale excludes any interest in the company's minerals business in the Appalachian basin, Columbia Energy Ventures Company.

"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," said CEO John Walsh of Pennsylvania-based UGI.

TC Energy is selling some of its assets to help fund new projects, including Keystone XL pipeline and the Coastal GasLink system.  The Calgary-based company plans to spend about $8 billion this year on projects that should generate higher returns than the assets it is selling to support its capital program.

“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," said Russ Girling, TC Energy president and CEO.

"When combined with our significant and growing cash flow, access to capital markets and potential additional portfolio management activities, we are well-positioned to fund our $30 billion secured capital program in a manner consistent with achieving targeted credit metrics in 2019 and thereafter,” Girling said.

TC Energy continues to own and operate its significant network of interstate pipelines in the Appalachian Basin with its Columbia Gas Transmission system, which transports low-cost natural gas supply from the production region to markets in the U.S., including LNG export facilities that serve international markets.

Robert F. Beard, executive vice president, Natural Gas of UGI said, “Columbia Midstream Group is a well-run organization with a solid portfolio of strategic assets that enhance and build upon our existing business. We believe this acquisition is a great fit strategically, operationally and culturally, and are excited to welcome the CMG employees to the UGI family of companies.”

UGI Energy Services expects to fund this transaction with a combination of new debt at UGI Energy Services, a credit facility at UGI Corporation to support both this transaction and the AmeriGas Merger transaction, and available liquidity at UGI. In connection with this transaction, UGI Energy Services has secured a commitment from Credit Suisse to provide a $700 million bridge facility.

The transaction is expected to close in UGI’s fiscal fourth quarter, which ends Sept. 30.

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