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.
EQM NON-GAAP DISCLOSURES
EBITDA
As used in this news release, EBITDA means the earnings before interest,
taxes and depreciation of AVC and the acquired gathering assets,
respectively (together, the acquired assets). EBITDA of these assets is
a non-GAAP supplemental financial measure that EQM’s management and
external users of EQM’s consolidated financial statements, such as
industry analysts, investors, lenders and rating agencies, use to assess
the contribution of the acquired assets to EQM’s future operating
performance and cash flows.
EQM believes that the projected EBITDA of the acquired assets provides
useful information to investors in assessing the viability of this
acquisition and the related return on investment as well as the future
impact of the acquired assets on EQM’s results of operations and
financial condition. EBITDA should not be considered as an alternative
to net income, operating income, net cash provided by operating
activities or any other measure of financial performance or liquidity
presented in accordance with GAAP. EBITDA has important limitations as
an analytical tool because it excludes some, but not all, items that
affect net income. Additionally, because EBITDA may be defined
differently by other companies, EBITDA as used herein may not be
comparable to similarly titled measures of other companies, thereby
diminishing the utility of the measure.
EQM has not provided the projected net income of the acquired assets,
the most comparable financial measure calculated in accordance with
GAAP, or a reconciliation of the projected EBITDA of the acquired assets
to the projected net income of the acquired assets, because EQM does not
forecast interest expense or net income on acquisitions. Further, EQM
does not allocate interest expense to individual gathering or
transmission systems. Finally, the timing of capital expenditures can
significantly impact depreciation expense, which is a significant
reconciling item between EBITDA and net income, and this timing is
volatile as it depends on weather, regulatory approvals, contractor
availability, system performance and various other items. Therefore, the
reconciliation of the acquired assets’ projected EBITDA to projected net
income is not available without unreasonable effort.
Cautionary Statements
Disclosures in this news release contain certain forward-looking
statements within the meaning of Section 21E of the Securities Exchange
Act of 1934, as amended, and Section 27A of the Securities Act of 1933,
as amended. Statements that do not relate strictly to historical or
current facts are forward-looking.
Without limiting the generality of the foregoing, EQT’s forward-looking
statements contained in this news release specifically include guidance
regarding EQT’s plans for the retained gathering system. These
forward-looking statements involve risks and uncertainties that could
cause actual results to differ materially from projected results.
Accordingly, investors should not place undue reliance on
forward-looking statements as a prediction of actual results. EQT has
based these forward-looking statements on current expectations and
assumptions about future events. While EQT considers these expectations
and assumptions to be reasonable, they are inherently subject to
significant business, economic, competitive, regulatory and other risks
and uncertainties, many of which are difficult to predict and beyond
EQT’s control. The risks and uncertainties that may affect the
operations, performance and results of EQT’s business and
forward-looking statements include, but are not limited to, those set
forth under Item 1A, “Risk Factors,” of EQT’s Form 10-K for the year
ended December 31, 2015, as updated by any subsequent Form 10-Qs.
Without limiting the generality of the foregoing, EQM’s forward-looking
statements contained in this news release specifically include the
expectations of plans, strategies, objectives and growth and anticipated
financial and operational performance of EQM, including guidance
regarding the projected EBITDA and volume growth of the Allegheny Valley
Connector transmission and storage system and the acquired gathering
systems; infrastructure programs (including the timing, cost, capacity
and sources of funding with respect to such programs); projected firm
capacity and compression; capital commitments, projected capital and
operating expenditures, capital budget and sources of funds for capital
expenditures. The forward-looking statements included in this news
release involve risks and uncertainties that could cause actual results
to differ materially from projected results. Accordingly, investors
should not place undue reliance on forward-looking statements as a
prediction of actual results. EQM has based these forward-looking
statements on current expectations and assumptions about future events.
While EQM considers these expectations and assumptions to be reasonable,
they are inherently subject to significant business, economic,
competitive, regulatory and other risks and uncertainties, many of which
are difficult to predict and beyond EQM’s control. The risks and
uncertainties that may affect the operations, performance and results of
EQM’s business and forward-looking statements include, but are not
limited to, those set forth under Item 1A, “Risk Factors” of EQM’s Form
10-K for the year ended December 31, 2015 as filed with the SEC, as may
be updated by any subsequent Form 10-Qs. Any forward-looking statement
speaks only as of the date on which such statement is made, and EQM does
not intend to correct or update any forward-looking statement, whether
as a result of new information, future events or otherwise.
