Penn Virginia Resource acquires Chief Gathering for $1bn

Penn Virginia Resource (PVR) Partners said it will acquire Chief Gathering, a midstream pipeline company with operating assets serving Marcellus Shale natural gas producers, for $1bn.

The company will pay Chief Gathering a combination of cash and $200m in a new class of limited partner interests.

PVR expects to finance the cash portion of the transaction through a combination of debt and committed equity issuances.

This transaction, when closed, is expected to result in a major expansion of PVR’s pipeline systems in Marcellus Shale.

PVR’s general partner CEO William Shea said, "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’s EBITDA, up from 40-45% today.

"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," Shea added.

Chief Gathering has six natural gas gathering systems stretching 300,000 acres in Bradford, Lycoming, Sullivan, Susquehanna, Wyoming and Greene Counties in Pennsylvania and Preston County, West Virginia.

The company is also building a new 750 MMcfd trunkline, anticipated to be in service in the third quarter of 2012, between northern Wyoming County and Luzerne County in Pennsylvania.