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UGI Concludes Review, Decides to Keep AmeriGas Propane Subsidiary
UGI, a diversified energy company with midstream (pipeline) operations in the Marcellus and one of PA’s largest utility companies, hinted last summer that it was looking to sell or spin off its propane subsidiary into a new company (see UGI Signals Looking to Sell or Spin-Off AmeriGas Propane Subsidiary). UGI’s propane subsidiary is AmeriGas, the nation’s largest retail propane marketer, serving nearly 1.3 million customers in all 50 states from approximately 1,400 locations. In UGI’s first quarter update issued yesterday, the company said after an extensive review, it has decided to keep AmeriGas.
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We tried to cram the gist of the news into the headline but found we could not. This is a big story, for multiple reasons. Most news outlets are reporting (and this is not incorrect) that EQT pulled off a big deal to divest a good chunk of its nonoperated assets (acreage and functioning wells in which EQT owns a minority stake) in northeastern Pennsylvania, trading those assets for 10,000 operated acres in Lycoming County, PA (in northeastern PA), plus 26,000 operated acres in Monroe County, OH, plus receiving $500 million cash, in a deal with Norway’s Equinor (formerly Statoil). EQT divesting from its nonop assets is a big deal. However, the bigger news, in our humble opinion, is that Equinor has (with this deal) completely exited all operated assets in U.S. shale. The company wants to keep its fingers in the U.S. shale pie, but only as a nonop operator — that is, investing in wells that other companies drill and maintain.
Here’s a story that caught our attention. Empire Energy, which drills for oil and gas in Australia’s Beetaloo/McArthur basin, owns producing oil and gas assets in New York State and Pennsylvania, which cover more than 270,000 net acres. Empire’s U.S. assets have output totaling some 4.5 million cubic feet per day (MMcf/d) of gas plus small amounts of associated liquids from approximately 2,400 conventional wells. Empire is selling their U.S. assets for $9.1 million to a privately owned conventional producer — PPP Future Development. The intriguing part of this story is that Empire also owns drilling rights in the Marcellus and Utica shale layers underlying the conventional wells in New York State.
Hart Energy is know for its DUG events — Developing Unconventional Gas. In years gone by, Hart would host separate DUG events in their respective regions. This year is different. Hart combined the Marcellus/Utica (called Appalachia), which, of course, covers Pennsylvania, Ohio, and West Virginia, with the Haynesville, which covers northern Louisiana and East Texas. Both are the leading natural gas-focused plays in the country. This year’s combined event, called DUG Gas+, was held two weeks ago in Shreveport, LA. One of the interesting discussions coming from this year’s event was talk about buyers (and investors) being “starved” for top-tier natural gas assets, and that Appalachia could become a dealmaking hotspot in the coming years.
This is precisely what companies going through a merger DON’T want to happen. Last Thursday, both Chesapeake Energy and Southwestern Energy, which previously announced a deal to combine back in January (see 
Mountain V Oil & Gas, headquartered in Buckhannon, WV, is a privately owned independent energy company with both conventional and shale assets in the Appalachian Basin. The company acquires and drills wells on over 300,000 leased acres, mainly focused on gas wells. Mountain V is now expanding its focus to include oil. Last fall, the company signed an agreement to buy the oil and gas assets of AXP Energy — assets located in Tennessee, Eastern Kentucky, Virginia, and the Illinois Basins — for $4 million. The AXP purchase with its oil-heavy assets closed earlier today.
Summit Midstream Partners, LP, which owns midstream (pipeline) assets in a number of major plays across the country, including the Marcellus/Utica, announced on Friday the sale of the company’s Ohio Utica assets, including its Summit Midstream Utica, LLC subsidiary, which includes its approximately 36% interest in Ohio Gathering Company, approximately 38% interest in Ohio Condensate Company, and other wholly-owned Utica assets. The sale was made to a subsidiary of MPLX LP (i.e., MarkWest Energy) for $625 million in cash. Summit will no longer own Utica assets in Ohio, but the company WILL retain (for now) its Marcellus assets in West Virginia.
Diversified Energy (formerly Diversified Gas & Oil), with major assets in the Marcellus/Utica region (and other regions, too), owns approximately 8 million acres of leases with 67,000 (mostly) conventional oil and gas wells. The company’s business model is to buy lower-producing wells on the cheap and find ways to make them more productive. Last week, Diversified issued its fourth quarter and full-year 2023 update. Part of the update included an announcement that Diversified is acquiring financial partner Oaktree Capital Management’s interests in the companies’ JV assets in western Oklahoma, East Texas, and northwest Louisiana for a net purchase price of $386 million.
Yesterday, the big news broke that driller EQT Corporation is reuniting with pipeline company Equitrans Midstream (see 
Yesterday, EQT Corporation announced a deal to buy its former midstream division, now called Equitrans Midstream, for roughly $5.46 billion (see 
In early January, Chesapeake Energy and Southwestern Energy, two companies with major assets in the country’s two leading gas plays — the Marcellus/Utica and the Haynesville — announced an agreement to merge into one company (see 
In early January, Chesapeake Energy and Southwestern Energy, two companies with major assets in the country’s two leading gas plays — the Marcellus/Utica and the Haynesville — announced an agreement to merge into one company (see 
Epsilon Energy, a relatively small company, used to concentrate most of its effort on developing Marcellus Shale wells. However, over the past year and a half, the company has expanded into other plays and now owns assets in the Anadarko (Oklahoma and Texas) and the Permian (Texas and New Mexico). Epsilon typically does not do its own drilling. The company joint venture partners with (gives money to) other companies, like Chesapeake Energy (in the Marcellus), and the other company typically does the drilling. Yesterday Epsilon announced closing on another Permian Basin acquisition.