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First Posted: 4/10/2012 Penn Virginia Resource Partners, L.P. today announced that it has signed a definitive agreement to acquire Chief Gathering LLC for $1.0 billion.
Chief Gathering, the midstream pipeline division of Chief E&amp;amp;D Holdings LP, is building a pipeline and metering station that will tap into the Transco pipeline in Dallas Township.
PVR is a Pennsylvania-based company with pipelines throughout Pennsylvania. The transaction is expected to close in the second quarter of 2012, subject to regulatory clearances and other customary closing conditions, according to PVR. PVR said it expects to finance the purchase through a combination of committed equity and debt.
Chief Gathering&amp;rsquo;s assets include six natural gas gathering systems serving over 300,000 dedicated acres in Bradford, Lycoming, Sullivan, Susquehanna, Wyoming and Greene Counties, Pennsylvania and Preston County, West Virginia.
Additionally, Chief Gathering is currently constructing a new trunkline, anticipated to be in service in the third quarter of 2012, extending from northern Wyoming County to Luzerne County with a connection to Transco&amp;rsquo;s interstate pipeline.
PVR currently owns two gathering systems in Lycoming and Wyoming Counties, with a third system in early stage development in Susquehanna County. Dallas Township officials have for more than two years negotiated with Chief over the presence of the pipelines and certain associated facilities.
Dallas Township Solicitor Thomas Brennan said Tuesday that it is his preliminary understanding that Chief&amp;rsquo;s assets are being acquired by PVR, but that the acquisition will not impact the previously existing agreements between Chief and the township.
In fact, the agreement explicitly states its conditions will not change if Chief is sold or if the pipelines change hands.
&amp;ldquo;We specifically provided that the agreements are binding on the successors and assigns of Chief,&amp;rdquo; Brennan said.
The township planning and zoning commission will also meet with representatives of Chief and Williams tonight to discuss natural gas pipeline projects.
William H. Shea, Jr., Chief Executive Officer of PVR&amp;rsquo;s general partner, said, &amp;ldquo;The acquisition of the Chief Gathering systems is a transformational transaction for PVR. We expect that by year-end 2013 our midstream business unit will account for almost 75% of PVR&amp;rsquo;s EBITDA, up from 40-45% today.
&amp;ldquo;These assets, together with our Lycoming and Wyoming County gathering assets, position us well to capture significant midstream opportunities in six of the most prolific counties in the northeastern area of the Marcellus Shale.
&amp;ldquo;We believe that there are substantial operating synergies and capital cost savings to be realized because of the proximity of the PVR and Chief Gathering systems, and the connectivity to both the Transco and Tennessee interstate pipelines.
"We expect to capture additional volumes from producers as a result of these synergies and delivery options.
&amp;ldquo;We believe that this acquisition clearly solidifies PVR as a leading midstream company with significant assets in both the Marcellus Shale and the Granite Wash, two of the lowest cost natural gas production areas in the United States.
&amp;ldquo;We are also pleased that Chief, one of the premier E&amp;amp;P companies in the country, and Riverstone Holdings, LLC, a private equity firm with a proven record of success in the energy industry, will be significant owners of PVR units following the acquisition. Their confidence in the benefits of this acquisition and PVR&amp;rsquo;s business going forward is gratifying and appreciated.&amp;rdquo;

Chief Gathering assets, including Dallas Twp. pipeline, sold for $1 billion