TC Energy Corp. has agreed to sell its U.S. midstream assets held by its subsidiary, Columbia Midstream Group, to UGI Energy Services LLC, a subsidiary of UGI Corp., for approximately $1.275 billion (USD). Announced July 2, the transaction is expected to close in the third quarter of 2019, subject to closing adjustments and customary regulatory approvals.
Columbia Midstream Group, which operates in the Appalachian Basin, owns four natural gas gathering systems and an interest in a company with gathering, processing and liquids assets. These assets connect production to markets throughout western Pennsylvania, eastern Ohio and northern West Virginia. This sale does not include any interest in Columbia Energy Ventures Co. (CEVCO), which is TC Energy’s minerals business in the Appalachian basin.
“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,” said Russ Girling, TC Energy president and CEO. “Along with the sale of Coolidge and partial monetization of Northern Courier, we now expect to realize approximately $3.4 billion (CAD) of proceeds from announced portfolio management activities in 2019. 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.”
Columbia Midstream Group holds five gathering systems, with capacity of roughly 2.675 million MMBtu/day and 240 miles of pipeline, located in the southwestern core of the Appalachian Basin. The acquisition significantly expands UGI’s midstream portfolio and provides an opportunity to invest an additional $300 million to $500 million over the next five years at attractive returns. The company expects the transaction to be EPS neutral in fiscal year 2020, and accretive beginning in fiscal year 2021 excluding transaction and integration costs.
“We are very pleased to announce this important transaction as we continue to build 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.”
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 United States, including LNG export facilities that serve international markets.Tags: Columbia Midstream Group, mergers and acquisitions, TC Energy, UGI Energy Services