Another Pipeline System Changes Hands in Marcellus Shale Play (PVR)

Energy

Published: April 10, 2012 12:18 pm

Penn Virginia Resource Partners LP (NYSE: PVR) today announced its acquisition of Chief Gathering LLC, a privately held mid-stream company which owns six natural gas gathering systems in the Marcellus shale play in Pennsylvania. Penn Virginia Resources will pay $1 billion for Chief Gathering.

The transaction is expected to close in the second quarter of this year and will be paid in cash and the issuance to Chief of $200 million in a new class of limited partner interests called ‘Special Units’:

The Special Units are substantially similar to PVR common units, except that the Special Units will not pay or accrue distributions until they automatically convert to common units, on a one-for-one basis once the Special Units have not received six consecutive quarterly distributions following issuance.

An affiliate of Riverstone Global Energy and Power Fund V LP has agreed to purchase $400 million in Class B special units and two other private buyers will acquire $180 million in Penn Virginia Resources common units. The remaining $220 million will be financed “by issuing term debt prior to the closing of the Chief Gathering acquisition,” with a bridge loan from RBC if needed.

Shares in Penn Virginia Resources are up nearly 13% at $25.25 in a 52-week range of $20.85-$28.31.

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