PITTSBURGH–(BUSINESS WIRE)–EQT Corporation (NYSE: EQT) today announced that it has sold the Allegheny Valley Connector transmission and storage system, along with several Marcellus gathering systems, to EQT Midstream Partners, LP (NYSE: EQM) for $275 million in cash. The acquisition was effective October 1, 2016. The sale did not include a small gathering system that is currently being evaluated for potential sale to a third-party.
The Allegheny Valley Connector (AVC) is regulated by the Federal Energy Regulatory Commission (FERC) and includes approximately 209 miles of transmission pipeline and 11 Bcf of working gas storage capacity. The AVC system has 450 MMcf per day of transmission capacity and is fully contracted for the winter season by Peoples Natural Gas, one of Pennsylvania’s largest natural gas distribution companies, through a firm reservation commitment that expires in 2034. EQM expects to invest approximately $50 million in AVC related growth projects during the remainder of 2016 and into 2017. EQM expects the AVC to generate Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of $31 million in 2017, increasing to $35 million in 2018. The EQM Non-GAAP Disclosures section of this news release provides important disclosures regarding EQM’s projected net income and projected EBITDA.
The gathering assets, consisting primarily of the Applegate, McIntosh, and Terra systems in Pennsylvania; and the Taurus system in West Virginia, include 87 miles of gathering pipeline, an estimated 7,000 hp of compression, and provide 370 MMcf per day of gathering capacity. EQT has committed to a total of 235 MMcf per day of firm capacity under a 10-year contract on the systems. EQM expects to invest approximately $105 million over the next several years to complete planned expansion projects, including the installation of approximately 20 miles of gathering pipeline and four compressor units with 20,000 hp of compression. Upon completion of the expansion projects, EQT’s total firm capacity will increase to 365 MMcf per day. EQM expects the gathering systems to generate EBITDA of $16 million in 2017, increasing to $30 million in 2018.
About EQT Corporation:
EQT Corporation is an integrated energy company with emphasis on Appalachian area natural gas production, gathering, and transmission. With more than 125 years of experience, EQT continues to be a leader in the use of advanced horizontal drilling technology – designed to minimize the potential impact of drilling-related activities and reduce the overall environmental footprint. Through safe and responsible operations, the Company is committed to meeting the country’s growing demand for clean-burning energy, while continuing to provide a rewarding workplace and enrich the communities where its employees live and work. EQT also owns a 90% limited partner interest in EQT GP Holdings, LP. EQT GP Holdings, LP owns the general partner interest, all of the incentive distribution rights, and a portion of the limited partner interests in EQT Midstream Partners, LP.
Visit EQT Corporation at www.EQT.com.
About EQT Midstream Partners:
EQT Midstream Partners, LP is a growth-oriented limited partnership formed by EQT Corporation to own, operate, acquire, and develop midstream assets in the Appalachian Basin. The Partnership provides midstream services to EQT Corporation and third-party companies through its strategically located transmission, storage, and gathering systems that service the Marcellus and Utica regions. The Partnership owns approximately 950 miles of FERC-regulated interstate pipelines; and also owns approximately 1,700 miles of high- and low-pressure gathering lines.
Visit EQT Midstream Partners, LP at www.eqtmidstreampartners.com.
EQM issued a news release dated October 13, 2016 (EQM News Release) regarding its acquisition of the transmission and storage and gathering systems described above. Information in this news release regarding EQM is derived from the EQM News Release.