Dispositions and Acquisition

9 Months Ended

Jun. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Dispositions and Acquisition

Note 5 — Dispositions and Acquisition

UGI International Energy Marketing Businesses

Sale of U.K. Energy Marketing Business. On October 21, 2022, UGI International, through a wholly-owned subsidiary, sold its natural gas marketing business located in the U.K. for a net cash payment of $19 which includes certain working capital adjustments. In conjunction with the sale, during the first quarter of Fiscal 2023, the Company recorded a pre-tax loss of $215 ($151 after-tax) substantially all of which loss was due to the non-cash transfer of commodity derivative instruments associated with the business. At the date of closing of the sale, these commodity derivative instruments had a net carrying value of $206 which is attributable to net unrealized gains on such instruments. At September 30, 2022, these derivative instruments were classified as held for sale assets and liabilities on the Condensed Consolidated Balance Sheet and had a net carrying value of $276. The change in the carrying value of these derivative instruments between September 30, 2022 and October 21, 2022 resulted from changes in their fair values during that period.

Other UGI International Energy Marketing Businesses. In November 2022, the Company announced that it expected to sign a definitive agreement during the first quarter of Fiscal 2023 to sell its energy marketing business in France. In December 2022, the Company announced that it no longer expected to sign such agreement as extended negotiations with the potential buyer had been discontinued.

During the first quarter of Fiscal 2023, the Company recorded a $19 pre-tax impairment charge to reduce the carrying values of certain assets associated with its energy marketing business in the Netherlands, comprising property, plant and equipment and intangible assets. The impairment charge is reflected in “Operating and administrative expenses” on the Condensed Consolidated Statement of Income and included in the UGI International reportable segment.

On July 8, 2023, UGI International, through a wholly-owned subsidiary, entered into a definitive agreement to sell a substantial portion of its energy marketing business located in Belgium, principally comprising customer contracts and prepaid broker fees. The assets associated with the pending sale were not material at June 30, 2023 and have been classified as “Held for sale assets” on the Condensed Consolidated Balance Sheet as of June 30, 2023. The initially estimated cash proceeds, less a payment to the buyer, on or subsequent to the closing date, pursuant to the definitive agreement is not expected to be material. The cash payment to buyer is equal to an agreed upon portion of the fair value, as of the closing date, of associated derivative commodity hedge contracts currently held by UGI International. The closing of the pending sale is subject to regulatory and other third-party approvals and is expected to occur during the fourth quarter of Fiscal 2023.

On August 1, 2023, UGI International, through a wholly-owned subsidiary, entered into a definitive agreement to sell a substantial portion of its energy marketing business located in France, principally comprising customer contracts, energy certificates and substantially all of its derivative commodity hedge contracts, for an initially estimated net cash payment to the buyer of €23. This initially estimated closing date payment is subject to adjustments relating to, among other things, the actual date of closing, the fair value of derivative commodity hedge contracts currently held by the Company but not subject to transfer to the buyer, and conditions associated with certain customer contracts. The effects of these adjustments will be settled on, or subsequent to, the closing date. The closing of the pending sale is subject to regulatory and other third-party approvals and is expected to occur during the first quarter of Fiscal 2024.

The assets and liabilities associated with the energy marketing business in France, principally comprising the fair values of substantially all of its derivative commodity hedge contracts, have been classified as “Held for sale assets” and “Held for sale liabilities” on the Condensed Consolidated Balance Sheet as of June 30, 2023. The net fair value of these derivative commodity hedge contracts at June 30, 2023 was an asset of $10.

The amount of the gain or loss to be recognized upon the closing of these transactions will depend, in large part, on the fair values of the associated derivative commodity hedge contracts as of the respective dates of closing. The Company’s policy for the recognition of impairment charges is limited to the disposal group’s long-lived assets related to held for sale. The Company did not recognize any such impairment for the period ended June 30, 2023.

The Company continues to pursue the wind-down of its energy marketing business located in the Netherlands and its remaining natural gas marketing business in France. On July 21, 2023, DVEP signed a definitive agreement to sell a substantial portion of its power purchase agreement portfolio for a net cash payment to the buyer. Such payment is not expected to be material. The closing of the pending sale is subject to regulatory and other third-party approvals and is expected to occur during the first half of Fiscal 2024.

Acquisition of Assets

Stonehenge. On January 27, 2022, UGI, through Energy Services, completed the Stonehenge Acquisition in which Energy Services acquired all of the equity interests in Stonehenge for total cash consideration of approximately $190. The Stonehenge business includes a natural gas gathering system, located in western Pennsylvania, with more than 47 miles of pipeline and associated compression assets. The Stonehenge Acquisition is consistent with our growth strategies, including expanding our midstream natural gas gathering assets within the Appalachian basin production region. The Stonehenge Acquisition was funded using available cash. This transaction has been accounted for as an acquisition of assets, and the purchase price has been primarily allocated to property, plant and equipment. We refer to Stonehenge and its assets as “UGI Moraine East.”