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UGI Corporation's Unit Sells 6% Stake in Conemaugh Facility

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UGI Corporation’s UGI subsidiary UGI Energy Services, LLC recently announced the closure of the deal to sell its 5.97% ownership stake in the Conemaugh coal-fired power generation station to Montour, LLC. This agreement was signed on Jul 21 and announced along with the utility’s results for the fiscal third quarter.

Why Dispose?

The motive behind such a strategic move is to trim the utility's direct CO2 equivalent emissions by more than 30%. Also, UGI Corp targets to reduce methane emissions by 92% and cut greenhouse gas emissions by 8 million metric tons at UGI Utilities by 2030.

Moreover, the sale of this non-core asset is aimed at further enhancing the company’s focus on its Midstream and Utilities businesses. Notably, in the first nine months of fiscal 2020, earnings before interest and taxes from Midstream & Marketing and UGI Utilities increased 61.7% and 4.6%, respectively, year over year.

Other Efforts

Apart from this disposition, the company is taking initiatives to expand its renewable portfolio for future growth. To this end, on Jul 9, UGI Energy Services, LLC, acquired GHI Energy, a Houston-based renewable natural gas company, with an aim to strengthen its position itself as a leading provider of energy solutions along with meeting the environmental and social needs of many communities that it serves.

Transition to Clean Energy

With increasing awareness to trim toxic emissions globally, companies are adopting clean energy sources to provide environmentally-friendly electricityto its end users. Adhering to this policy, UGI Corp and its subsidiaries are set on a mission to produce clean, affordable and reliable energy.

Apart from UGI Corp, companies like Chesapeake Utilities Corporation CPK are undertaking initiatives to lower toxic emissions. Notably, Chesapeake Utilities recently entered into a partnership with CleanBay Renewables Inc. to bring more renewable natural gas to its Delmarva operations.

Zacks Rank & Price Performance

Currently, the stock carries a Zacks Rank #3 (Hold).

Shares of the company have gained 25.8% in the past six months, outperforming the industry’s rise of 0.3%.

Stocks to Consider

A few better-ranked stocks are Southwest Gas Corporation SWX and National Fuel Gas Company NFG, both carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Southwest Gas’ long-term (three-five years) earnings is expected to grow 5%. Also, the company delivered an earnings surprise of 6.53%, on average, in the last four quarters.

National Fuel Gas delivered a trailing four-quarter earnings surprise of 6.74%, on average. The Zacks Consensus Estimate for 2020 earnings has moved 1.1% north over the past 60 days.

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