The sale to UGI on July 2 does not include any interest in Columbia Energy Ventures or the Columbia Gas Transmission system, TC Energy said. (Source: Hart Energy)
[Editor's note: This story was updated at 10:30 a.m. CDT July 3, 2019.]
Roughly three years into owning Columbia Midstream Group, TC Energy Corp. agreed July 2 to sell the subsidiary and its gas gathering and processing assets in the Appalachian Basin.
UGI Energy Services LLC will pay the Canadian company roughly $1.3 billion for the U.S. midstream assets, which include four natural gas gathering systems and an interest in a company with gathering, processing and liquids assets.
A subsidiary of energy distributor UGI Corp., UGI Energy Services supplies and markets natural gas, liquid fuels and electricity to 40,000 customer locations across the Mid-Atlantic and Northeastern U.S. On its website, the company said it’s headquartered “near the heart of the Marcellus.”
The acquisition of the Columbia assets will help UGI Energy Services to achieve its goal of building “a midstream business of scale,” said John L. Walsh, president and CEO of UGI.
“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,” Walsh said in a statement July 2.
The five gathering systems owned by Columbia have capacity of roughly 2,675,000 MMBtu/d and include 240 miles of pipeline located in the southwestern core of the Appalachian Basin, according to UGI.
The Columbia assets to be acquired by UGI Energy Services connect production to markets throughout western Pennsylvania, eastern Ohio and northern West Virginia, TC Energy said in its July 2 release.
TC Energy had originally acquired Columbia Pipeline Group Inc. in 2016. The company, known as TransCanada at the time, paid roughly $13 billion for Columbia in an all-cash deal that also included about $2.8 billion of debt.
The sale to UGI on July 2 does not include any interest in Columbia Energy Ventures Co. (CEVCO), which is TC Energy’s minerals business in the Appalachian Basin. The company said it will also continue to own and operate its significant network of interstate pipelines in the Appalachian Basin with the Columbia Gas Transmission system that includes LNG export facilities.
As a result of the Columbia sale, TC Energy will be well-positioned to fund its $30 billion secured capital program and achieve targeted credit metrics in 2019 and beyond, according to Russ Girling, the company’s president and CEO.
“The sale of Columbia Midstream Group advances our ongoing efforts to prudently fund our industry-leading portfolio of high-quality natural gas pipeline, liquids pipelines and power generation projects, while maximizing value for our shareholders,” Girling said in a statement.
He added that following close of the transaction, expected in the third quarter, TC Energy’s proceeds from announced portfolio management activities in 2019 are expected to total roughly C$3.4 billion.
Bracewell LLP is representing TC Energy in connection with the sale and Wells Fargo Securities LLC is the company’s exclusive financial adviser. Meanwhile, Credit Suisse is UGI’s financial adviser and Latham & Watkins LLP is serving as its legal counsel.
Emily Patsy can be reached at epatsy@hartenergy.com.
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