Stonehenge and UGI Acquire Pine Run Midstream Natural Gas Gathering System

WESTMINSTER, CO — (BUSINESS WIRE) Pine Run Gathering LLC (“Pine Run Gathering”) announced today that it has completed a transaction to acquire Pine Run Midstream, LLC (“Pine Run Midstream”) from an affiliate of PennEnergy Resources, LLC (“PennEnergy”) and minority partners for $205 million.  Pine Run Gathering is a joint venture owned by a subsidiary of Stonehenge Energy Resources III, LLC (“Stonehenge III”), a portfolio company of Energy Spectrum Partners VIII LP, and by a subsidiary of UGI Energy Services LLC (“UGIES”), which is a subsidiary of UGI Corporation (NYSE: UGI). 

PennEnergy, a Pittsburgh-based independent oil and gas company, is a leading Appalachian based producer and anchor customer on the Pine Run system.  Stonehenge III is the third partnership between Energy Spectrum Capital and Stonehenge Energy Resources (“Stonehenge”) management.  The transaction will be financed with equity capital from both Stonehenge III (51%) and UGIES (49%) as well as a senior secured loan credit facility.

Pine Run Midstream operates 43-miles of dry gas gathering pipeline and compression assets located in Butler and Armstrong counties in western Pennsylvania.  The Pine Run Midstream system has been in operation since 2014 and will be operated by Stonehenge.  Stonehenge and UGI expect the investment to be immediately accretive to earnings.

Pine Run Gathering is Stonehenge’s fourth venture in the Appalachian basin.  “Stonehenge is pleased to add the Pine Run Midstream system to our operations in western Pennsylvania and views the strategic partnership with UGIES as a beneficial step to providing area producers with cost-effective, customer-focused services,” said Patrick Redalen, CEO of Stonehenge.  “The Pine Run Midstream system is a high-quality asset that has been well managed and operated by the PennEnergy team.  We are very pleased to have the chance to expand our relationship with Rich, Greg and the entire team at PennEnergy.”

This is the second recent investment in Appalachian basin natural gas gathering systems by UGIES as it continues to invest in assets well positioned in highly productive areas of the Marcellus Shale.  UGIES will add its ownership stake in Pine Run Gathering to UGI Appalachia, LLC, which operates gathering assets in Pennsylvania, Ohio and West Virginia.  “We are very pleased to announce this investment, which complements our existing portfolio of midstream assets,” said Robert F. Beard, Executive Vice President – Natural Gas, UGI.   “Adding our stake in Pine Run Gathering to UGI Appalachia enhances and expands our footprint in western Pennsylvania and is consistent with the strategy outlined when we announced our acquisition of Columbia Midstream Group last year.  Pine Run Midstream has direct connectivity to UGI’s Big Pine Pipeline, which is one of the assets acquired as part of the Columbia Midstream deal, and is well positioned to capture additional production nearby.  Importantly, expansion of our natural gas portfolio enables us to provide low-cost, environmentally responsible energy to more consumers.”

Joseph L. Hartz, President of UGIES, stated, “Pine Run Gathering is a great addition to our portfolio.  It is well run and has a strong operations team in place that fits nicely with our midstream business.”  Hartz added, “This asset will accelerate the growth of our existing western Pennsylvania natural gas gathering business and is a great strategic fit for UGIES.” 

In connection with the transaction, Baker Botts L.L.P. served as legal counsel for Pine Run Gathering and Winston & Strawn LLP served as legal counsel for PennEnergy.

Tudor, Pickering, Holt & Col. Served as financial advisor for PennEnergy. 

About Stonehenge

Headquartered in Westminster, CO and backed by Energy Spectrum Capital, Stonehenge Energy Resources is a private energy company focused on building, owning and operating midstream facilities in the Appalachian basin to support its producer-partners in the optimum development of their resources.  Formed in 2007, Stonehenge supported the early Appalachian unconventional shale gas development by gathering and processing NGL-rich gas in Butler County, Pennsylvania.  Stonehenge currently operates two natural gas gathering systems in Butler, Clarion and Armstrong Counties, Pennsylvania. 

About UGI Corporation

UGI Corporation is a distributor and marketer of energy products and services. Through subsidiaries, UGI operates natural gas and electric utilities in Pennsylvania, distributes LPG both domestically (through AmeriGas) and internationally (through UGI International), manages midstream energy assets in Pennsylvania, Ohio and West Virginia and electric generation assets in Pennsylvania, and engages in energy marketing, including renewable natural gas, in twelve states and the District of Columbia and internationally in France, Belgium, the Netherlands and the UK.

About Energy Spectrum Capital

Founded in 1995, Energy Spectrum Capital is a Dallas, Texas-based venture capital firm that makes direct investments in well-managed, lower-middle-market companies that acquire, develop and operate energy infrastructure assets in North America.  Since inception, Energy Spectrum has raised more than $4.5 billion of equity capital across eight funds.

James E. Fleak

James E. Fleak
Director of Regulatory Compliance, Kahuna Ventures
LLC
3MG Enterprises II, LLC

James E. Fleak joined Kahuna Ventures in 2008 and has served as its Director of Regulatory Compliance.  He performs the same functions, environmental and safety coordination, for the Stonehenge companies.

Mr. Fleak has more than 35 years of experience in the energy industry, primarily in the natural gas midstream and transmission sectors, as well as electric power generation and distribution.  Prior to Kahuna, he was with Dominion Resources for three years; Southern Union’s Florida Gas Transmission and MidAmerican Energy’s Northern Natural Gas for four years, all part of the former Enron holdings; Western Gas Resources for six years; Compliance Partners, EnecoTech and RMT, Inc. consulting firms for a combined 10 years; and Florida Power & Light for six years.  He performed environmental, engineering design and energy management tasks involving various commercial and industrial operations and start-ups.

Mr. Fleak received his B.S. in Civil Engineering from Virginia Tech University in 1982.  He is a registered Professional Engineer in Colorado and Virginia.  He has also obtained certifications for asbestos management and hazardous waste operations.

Scott R. Casarez

Scott R. Casarez
Manager of Accounting and Finance, Stonehenge Energy Resources II, L.P.

Scott R. Casarez joined Stonehenge Energy Resources II, L.P. in 2018.  He is responsible for the accounting and financial functions of Stonehenge.

Mr. Casarez began his career in public accounting, working at Hein & Associates LLP from 2009 to 2017, serving as a lead auditor for both publicly-traded and privately-held entities within the energy industry.  Prior to joining Stonehenge, Mr. Casarez worked as a Senior Auditor for Trimble Inc.

Mr. Casarez earned a Master of Science in Business Administration in Financial Accounting from the University of Colorado at Boulder in 2009. He has held his CPA license since 2010.

John J. Ha

John J. Ha
Director of New Ventures, Stonehenge Energy Resources II, L.P.

John J. Ha joined Stonehenge Energy Resources II, L.P. in 2018.  He is responsible for sourcing potential investments and developing new midstream projects.

Mr. Ha has more than 20 years of experience in the energy industry, primarily in midstream businesses, both liquids and gas, including engineering, commercial and management responsibilities.  Prior to Stonehenge, he served in a variety of leadership roles at Williams Companies, Tri-State Industrial Group and HRB Consultants.

Mr. Ha received his B.S. in Mechanical Engineering and an MBA from Oklahoma State University.  He has a number of certifications, including Certified Reliability and Maintenance Professional.

Gary W. Davis

Gary W. Davis 720-889-9920
President, Kahuna Ventures LLC
Partner, 3MG Enterprises II, LLC

Gary W. Davis has more than 40 years of experience in the natural gas industry.  He started his career in 1978 with Marathon Oil as a Plant Engineer at the Yates Gas Plant.  In 1980 he joined Western Gas Resources as their Chief Engineer, and after 18 years of service left his position as Senior Vice President of Production, Engineering, Safety and Environmental to stake out on his own.

In 1999 Mr. Davis formed Kahuna Gas, LLC to design, build, own and operate the Bazor Ridge Gas Processing Facility.  This facility, located in Wayne County, Mississippi, was designed to treat 25 MMSCFD of hydrocarbon-rich gas and condensate containing 20% H2S.

Kahuna Ventures LLC was formed to be the General Manager of Kahuna Gas and to provide engineering and project management services to the industry.  After Kahuna Gas sold the Bazor Ridge Facility, Kahuna Ventures focused in earnest on the engineering and consulting business and has since grown to 180 employees, including 50 engineers and project managers, along with 14 field construction managers.

Mr. Davis received his B.S. in Chemical and Petroleum Refining Engineering from the Colorado School of Mines.

John H. Rheinheimer

John H. Rheinheimer 720-889-9922
Senior Vice President, Project & Construction Management, Kahuna Ventures LLC
Managing Partner, 3MG Enterprises II, LLC

John H. Rheinheimer has more than 25 years of experience in the oil and natural gas industry.  He began his career in 1989 serving in exploration, production, and midstream engineering roles with ARCO Oil and Gas Company/Vastar Resources before moving to Western Gas Resources as a Senior Project Manager.  He joined Kahuna Ventures as a Partner in 2002, and brings vast experience as a business developer, project manager and engineer to his current role as Vice President, Project & Construction management.

Mr. Rheinheimer has extensive experience managing multiple large projects.  Locations include the Gulf Coast, Mid-Continent, Rocky Mountains and many current shale plays (Barnett, Woodford, Marcellus, Utica, Eagle Ford).

Mr. Rheinheimer’s business experience and diverse oil and gas engineering and operating knowledge has been instrumental in making Kahuna Ventures one of the most respected consulting firms in the industry.

Mr. Rheinheimer received a B.S. in Mechanical Engineering along with a minor degree in Civil Engineering from Colorado School of Mines.  He holds P.E. licenses in Colorado, Pennsylvania, Ohio, West Virginia and Texas.

Thomas O. Whitener

Thomas O. Whitener 214-987-6105
President, Energy Spectrum Capital

As President and a founding partner of Energy Spectrum, Mr. Whitener leads the Firm’s midstream private equity business.  His responsibilities include leading negotiations, structuring and executing investment transactions, actively monitoring existing investments and working closely as a board member with the management teams of portfolio companies.

Mr. Whitener has more than 40 years of experience financing and advising companies and managing private equity investments in the energy industry.  Prior to Energy spectrum, Mr. Whitener served as a Managing Director at R. Reid Investments Inc. and as a Senior Vice President of Dean Witter Reynolds’ Energy Corporate Finance Group.  Through these positions, he gained significant experience with mergers and acquisitions, institutional equity and debt placements and energy asset divestitures.

Following college, Mr. Whitener served three years as an officer in the U.S. Navy and began his professional career as an energy lender with InterFirst Bank Dallas.  Later as a senior manager, he was responsible for managing and overseeing commitments in excess of $1.5 billion to the upstream, midstream and oil field service sectors of the energy industry.

Mr. Whitener received his Bachelor of Business Administration degree with highest honors and his Master of Business Administration degree from The University of Texas at Austin.

Peter W. Augustini

Peter W. Augustini 214-987-6128
Partner, Energy Spectrum Capital

Mr. Augustini joined Energy Spectrum in 2004.  Mr. Augustini conducts financial and strategic due diligence for potential investments, negotiates and structures new investments, leads deal execution and is actively involved in the ongoing monitoring and oversight of portfolio companies.

Mr. Augustini has more than 25 years of private equity, management consulting, and corporate finance and strategy experience in the energy industry.  Prior to joining Energy Spectrum, Mr. Augustini served five years as a consultant at McKinsey & Company, Inc., an international strategic management consulting firm, primarily working on energy-related assignments.  Prior to McKinsey, Mr. Augustini served seven years in a variety of finance and strategic planning management positions at Atlantic Richfield Company (ARCO) and four years as an analyst for Metropolitan Life Insurance Company’s investments group.

Mr. Augustini received his Bachelor of Science degree in Industrial Engineering from Lehigh University and his Master of Business Administration degree with high honors from the University of Chicago.

Heather A. Wilkinson

Heather A. Wilkinson
Director of Projects, Stonehenge Energy Resources II, L.P.

Heather A. Wilkinson joined Stonehenge Energy Resources II, L.P. in 2015.  Her past responsibilities included project management for all Stonehenge construction projects, along with managing Stonehenge’s planning and land functions.  Currently, she is developing new business around Stonehenge’s existing assets in western Pennsylvania as part of her responsibility for the Appalachia region.

Prior to joining Stonehenge, Ms. Wilkinson worked with Tetra Tech Rooney as a Project Engineer for the Sunoco Logistics Mariner East Phase I and Phase II Projects.  She also worked as a Project Manager with Halker Consulting, LLC and as a Systems Engineer with Lockheed Martin Space Systems Company.

Ms. Wilkinson received her B.S. in Biological Systems Engineering, graduating with Honors, from the University of Nebraska in 1999.  She was also certified as a Project Management Professional in 2013.