UGI/Stonehenge JV closes acquisition of Pa. gas gathering system for $205M

Pine Run Gathering LLC has closed the acquisition of Pine Run Midstream LLC from a PennEnergy Resources LLC affiliate and minority partners for $205 million. Pine Run Gathering is a joint venture owned by a subsidiary of Stonehenge Energy Resources III LLC and a subsidiary of UGI Energy Services LLC, which is a unit of UGI Corp.

Pine Run Midstream operates 43 miles of dry gas gathering pipeline and compression assets in the Butler and Armstrong counties in western Pennsylvania, according to a Feb. 16 news release. Stonehenge Energy Resources III will take over the operation of Pine Run Midstream. Appalachian Basin independent producer PennEnergy is an anchor customer on the Pine Run system.

Stonehenge Energy Resources III is a portfolio company of Energy Spectrum Partners VIII LP and is the third partnership between Energy Spectrum Capital and Stonehenge Energy Resources LP management. Pine Run Gathering marks the fourth venture of Stonehenge in the Appalachian Basin. Meanwhile, the deal is UGI Energy Services' most recent investment in the basin's natural gas gathering systems. UGI Energy Services will add its ownership interest in Pine Run Gathering to UGI Appalachia LLC, which operates gathering assets in Pennsylvania, Ohio and West Virginia.

The acquisition will be funded with a senior secured loan credit facility and equity capital, 51% of which will come from Stonehenge Energy Resources III and 49% from UGI Energy Services.

Baker Botts LLP acted as the legal counsel for Pine Run Gathering. Winston & Strawn LLP served as legal counsel, while Tudor Pickering Holt & Co. acted as financial adviser to PennEnergy.