Penn Virginia Buying Chief Gathering For $1B

RADNOR, Pa. (AP) â¿¿ Oil and natural gas company Penn Virginia Resource Partners LP is buying the pipeline company Chief Gathering LLC for $1 billion in a deal that will significantly expand its natural gas pipelines in the Marcellus Shale.

Chief Gathering's operating assets serve Marcellus Shale natural gas producers mostly in northeastern Pennsylvania.

Penn Virginia said on Tuesday it is buying the Chief Gathering pipeline business from its parent Chief E&D Holdings LP. It expects to finance the transaction with committed equity and debt.

The $1 billion purchase price will be paid in cash and $200 million in special units.

William H. Shea Jr., CEO of Penn Virginia's general partner, said in a statement that by the end of 2013 the Radnor, Pa., company's midstream division will make up nearly 75 percent of the company's adjusted earnings. The unit currently accounts for 40 percent to 45 percent of Penn Virginia's adjusted earnings.

"We believe that this acquisition clearly solidifies Penn Virginia 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," he added.

The acquisition is expected to close in the second quarter.

Penn Virginia shares closed at $22.36 on Monday. Its shares have traded in a 52-week range of $20.85 to $28.31.

Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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