Peoples Natural Gas Announces Agreement to Buy Equitable Gas Company

PITTSBURGH, Dec. 20, 2012 /PRNewswire/ -- Peoples Natural Gas today announced an agreement with EQT Corporation that will enhance each company's core business and build the best future for the Pittsburgh-based companies' customers. Under the agreement, Peoples Natural Gas will expand its core business of local gas distribution by acquiring Equitable Gas Company, EQT's distribution business in Pennsylvania, West Virginia and Kentucky. As part of the transaction, EQT will receive cash proceeds of $720 million and select midstream assets and commercial arrangements that will strengthen EQT's mid-stream operations.

"This agreement involves two longstanding Western Pennsylvania energy companies working together to embrace our strengths and build the best future we can for our customers, our region and our nation," said Morgan O'Brien, President and CEO of Peoples Natural Gas.  "At Peoples, our focus is on being the best local distribution utility company, meeting the energy needs of our customers and supporting the communities we serve." 

The addition of Equitable Gas Company to the Peoples Natural Gas local distribution system will greatly benefit the Western Pennsylvania community, and beyond, by creating significant operational efficiencies and by enhancing the safety and reliability of the system. Peoples Natural Gas is committed to increased capital spending on the pipeline systems – as already demonstrated at Peoples Natural Gas and its sister company, Peoples TWP in Butler, Pennsylvania.

Combining Equitable and Peoples will result in a more streamlined and efficient operating system for customers, allowing the companies to avoid a substantial amount of upcoming replacement costs where the systems overlap.  The expected savings of combining the two systems and their operations will be passed on to all customers as those efficiencies are realized.

The new combined company will be committed to all customers of both utilities in keeping Peoples Natural Gas one of the lowest utility bills in Pennsylvania. And for those limited customers who today can choose between the two separate systems for delivery service, they will be protected with guaranteed extended rate protections.

Peoples expects the transaction to promote greater competition in gas supply, since the combined systems are expected to attract more marketers and permit them to operate more efficiently.  In addition, Peoples will continue its support of local gas producers.

"The natural gas industry is quickly evolving into the cleanest and most economical solution for meeting this country's future energy needs," O'Brien said, "and Western Pennsylvania is at the heart of this economic boom."

Chris Kinney, CEO of SteelRiver Infrastructure Fund North America, said, "In 2010, SteelRiver acquired Peoples, returned its headquarters to Pittsburgh, and increased capital investments in the region.  In the past two years, Peoples has created more than 300 new jobs in Western Pennsylvania by shifting work that had been previously performed elsewhere. We expanded our commitment to Western Pennsylvania with the acquisition of Peoples TWP in 2011, with the goal, once again, of strengthening the company through investments and improved customer service. The acquisition of Equitable attests to our desire for continued investment and long-term presence in the region, and allows Peoples to pursue its objectives of growing and supporting the local economy."

EQT also has operations in Kentucky and West Virginia and, in purchasing Equitable Gas Company, Peoples will expand its operations into those states. The deal is subject to approval by various regulatory bodies, including the Pennsylvania Public Utility Commission, West Virginia Public Service Commission and Kentucky Public Service Commission, as well as the Federal Energy Regulatory Commission and federal antitrust authorities. The transaction is expected to close in the second half of 2013.

Peoples Natural Gas and its sister company, Peoples TWP, currently provide safe and reliable service to approximately 420,000 homes and businesses in 18 western Pennsylvania counties.

SteelRiver Infrastructure Partners is an independent investment management firm that invests in core infrastructure in North America for the long term, seeking out assets and businesses that provide essential services with stable cash flows and often regulated characteristics.   

SOURCE Peoples Natural Gas

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