In a significant move that reshapes the midstream landscape in the Appalachian Basin, Stonehenge Energy Resources III LLC and UGI Corp. have joined forces to acquire Superior Midstream Appalachian LLC. This strategic acquisition, completed on January 28, 2025, marks a pivotal moment in the natural gas industry, bringing together key players and valuable assets.
Strategic acquisition transforms appalachian midstream operations
The joint venture between Stonehenge, an Energy Spectrum Partners portfolio company, and UGI Corp. has successfully acquired Superior Midstream Appalachian LLC from Superior Midstream. This $120 million deal, subject to customary adjustments, brings three crucial gathering systems under new ownership:
- Brookfield system in Tioga County
- Pittsburgh Mills system in Allegheny and Butler counties
- Snow Shoe system in Centre County
These assets are now integrated into Pine Run Gathering, the joint venture entity owned 51% by Stonehenge and 49% by UGI Energy Services LLC, a subsidiary of UGI Corp. The acquisition significantly enhances the joint venture’s operational capacity, contributing a combined daily flow of approximately 190 million cubic feet to Pine Run Gathering’s portfolio.
Patrick Redalen, President and CEO of Stonehenge, expressed optimism about the acquisition, stating, “This move underscores our confidence in the industry’s future and the strength of our partnerships with UGI and Energy Spectrum.” The deal not only expands the joint venture’s footprint but also secures long-term acreage dedications for all acquired assets.
Enhancing connectivity and operational efficiency
The newly acquired gathering systems bring strategic advantages to the joint venture, enhancing connectivity and operational efficiency across the Appalachian Basin. Each system offers unique benefits:
| System | Location | Key Features |
|---|---|---|
| Brookfield | Tioga County | Delivers to National Fuels Z20S through a third party |
| Pittsburgh Mills | Allegheny and Butler counties | Includes compression and dehydration facilities; links to UGI’s Big Pine gathering system |
| Snow Shoe | Centre County | Interconnects with Dominion PL-1 and TETCO; features compression and dehydration facilities |
The Pittsburgh Mills system is particularly noteworthy for its connection to UGI’s Big Pine gathering system, creating a seamless network that enhances operational synergies. This integration allows for more efficient gas transportation and processing, benefiting both producers and end-users in the region.
Bob Flexon, President and CEO of UGI, highlighted the strategic importance of the acquisition, noting, “These assets are highly complementary to our existing midstream footprint. They will extend our reach from producers through to end-use customers, demonstrating our commitment to exploring additional growth opportunities within the midstream business.”
Workforce retention and financial backing
In a move that underscores the joint venture’s commitment to operational continuity and local expertise, Pine Run Gathering has retained Superior Appalachian’s workforce. This decision ensures that the valuable knowledge and experience of the existing team will continue to benefit the operations of the acquired assets.
The acquisition was supported by a robust financial structure, with several key players involved:
- Baker Botts LLP and Vinson & Elkins LLP served as legal counsel to Pine Run Gathering
- BOK Financial acted as the administrative agent
- Cadence Bank and Citizens Bank served as joint lead arrangers
This financial backing demonstrates the confidence of major financial institutions in the strategic value and potential of the acquisition. It also highlights the strong market position of the joint venture partners, Stonehenge and UGI, in the midstream sector.
Implications for the appalachian energy landscape
The Stonehenge-UGI acquisition of Superior Midstream Appalachian assets has far-reaching implications for the Appalachian energy landscape. This region, which straddles several states in the eastern United States, has been a focal point of natural gas production and infrastructure development.
Stonehenge, based in Westminster, Colorado, has solidified its position as a key player in the Appalachian Basin’s midstream sector through this acquisition. The company’s strategic focus on this region aligns with the growing importance of Appalachian natural gas in the national energy mix.
UGI, headquartered in King of Prussia, Pennsylvania, brings its extensive experience in midstream services, gas, and power distribution to the partnership. With operations spanning the U.S. and Europe, UGI’s involvement in this acquisition signals a long-term commitment to the Appalachian energy market.
The integration of these assets into Pine Run Gathering creates a more robust and interconnected midstream network in the Appalachian Basin. This enhanced infrastructure is poised to:
- Improve gas transportation efficiency from production sites to end-users
- Potentially reduce operational costs through economies of scale
- Attract further investment in the region’s natural gas production
- Support the growing demand for natural gas in both domestic and international markets
As the energy industry continues to evolve, strategic acquisitions like this one play a crucial role in shaping the future of regional and national energy landscapes. The Stonehenge-UGI partnership, through its acquisition of Superior Midstream Appalachian assets, has positioned itself at the forefront of this transformation, ready to meet the challenges and opportunities of the changing energy market.
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