Published: February 3, 2021 |

[Click image to enlarge]

UGI, a Pennsylvania-based energy products distributor, has entered into an agreement to acquire Mountaintop Energy, the owner of Mountaineer Gas Company, a local gas distribution company in West Virginia for an enterprise value of $540 million.

The enterprise value includes the assumption of debt of nearly $140 million.

For UGI, the acquisition fits within its strategy to focus on growth investments in natural gas and renewable energy solutions. The deal is expected to increase its regulated utility rate base and its customers by nearly 14 percent and 30 percent respectively.

Mountaineer is a fully regulated company, with a system of nearly 6,000 miles (9,656km) of distribution, transmission and gathering pipelines.

It currently serves nearly 215,000 customers across 50 of the 55 counties in West Virginia. A 90 percent of the company’s customer base is residential and the remaining 10 percent are commercial and industrial customers.

“We are very pleased to announce this important transaction and expand our core utility operations in the mid-Atlantic region. The transaction is immediately accretive to adjusted EPS and provides us with an opportunity to support our customers in West Virginia with a long-term commitment to ensure safe, reliable, affordable, and environmentally responsible natural gas services,” said UGI President and CEO John Walsh.

“Our existing Utilities business has shown the value of this long-term commitment to system enhancement and we expect to make a similar commitment in West Virginia. We see significant investment opportunities to continue, if not accelerate, the replacement of over 1,500 miles of bare steel pipelines and expand the reach of natural gas in West Virginia to both unserved and underserved areas,” added Walsh.

“These investments will improve the safety and reliability of the distribution system and align with our environmental efforts to lower methane and other GHG emissions. We expect Mountaineer’s rate base to grow by a compound annual growth rate of approximately 10 percent – 12 percent over the long term,” concluded Walsh.

“Mountaineer is a great fit for our natural gas businesses and UGI as a whole. The company brings an exceptional management team with significant experience, a track record of safe operations, and strong regulatory relationships. Like UGI Utilities, Mountaineer’s customers are situated in the prolific Marcellus shale production region and have access to clean, abundant, reliable, and affordable natural gas,” said Robert Beard, executive vice president, Natural Gas of UGI.

“We look forward to becoming a part of the West Virginia community and investing in the safety and reliability of the Mountaineer system, while maintaining competitive rates for our customers and building on an already strong history of excellent customer service. With UGI’s over 135 years of experience in the gas utilities business, we are confident that we can execute on investment opportunities while providing best-in-class service to our new customers. This transaction makes sense strategically, operationally, and culturally and we look forward to welcoming the Mountaineer employees and customers to the UGI family of companies,” added Beard.

As per the gas distribution company, Mountaineer provides a secure platform for growth with regulated investment opportunities in the coming decades to improve safety and reliability of distribution system.

The deal is subject to customary regulatory and other closing conditions including approval from the Public Service Commission of West Virginia. With the fulfillment of all conditions, it is expected to close in the second half of this year.

Source: NS Energy

About UGI
UGI operates as a holding company, which engages in the distribution, storage, transport, and marketing of energy products and related services. Through its subsidiaries, it operates through the following segments: AmeriGas Propane; UGI International; Midstream and Marketing; and UGI Utilities.

To stop by UGI’s website, CLICK HERE

Be in-the-know when you’re on-the-go!