Reuters: Market News: UPDATE 1-Penn Virginia Resource buys pipeline assets for $1 bln

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UPDATE 1-Penn Virginia Resource buys pipeline assets for $1 bln Apr 10th 2012, 11:42 Tue Apr 10, 2012 7:42am EDT April 10 (Reuters) - Penn Virginia Resource Partners LP said it will buy pipeline company Chief Gathering LLC for $1 billion to expand its transportation business in the gas-rich Marcellus Shale. Oil and gas production from shale formations in the United States has surged in the recent years, with companies scrambling to build infrastructure despite decade-low prices for natural gas. Chief Gathering has six natural gas gathering systems serving over 300,000 acres in Pennsylvania and West Virginia that form part of the Marcellus Shale, one of the largest gas fields discovered in the United States. Radnor, Pennsylvania-based Penn Virginia expects its midstream business unit to account for almost 75 percent of its earnings before interest, taxes, depreciation and amortization (EBITDA) by the end of 2013, up from 40 percent to 45 percent currently. Apart from natural gas gathering and processing businesses, Penn Virginia also manages coal properties. The company, which expects to close the deal in the second quarter, will fund the purchase through a combination of committed equity and debt. Chief Gathering is owned by Chief E&D Holdings LP.

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