EQT Midstream Partners to acquire west Virginia gathering assets

EQT Midstream Partners, LP has entered into an agreement with EQT Corporation to acquire its Northern West Virginia Marcellus Gathering System, along with a preferred interest in an EQT subsidiary, for US$1.05 billion, of which US$997.5 million will be paid in cash and US$52.5 million will be paid in common and general partner units. The acquisition is expected to be immediately accretive to the Partnership's distributable cash flow per unit.

The gathering system was designed and constructed to gather natural gas production in the wet gas and dry gas regions of the Marcellus; specifically in the Saturn, Mercury, Pandora and Pluto development areas. The system includes approximately 70 miles of natural gas gathering pipeline and nine compressor units with 25 000 hp of compression. In addition, the system includes a 30 mile, high pressure wet gas header pipeline that moves wet gas from the development areas to the MarkWest Mobley processing facility. EQT contracted for 10 years of firm capacity on the system.

The Partnership expects to invest approximately US$370 million over the next several years to complete planned expansion projects, including the installation of approximately 100 miles of gathering pipeline and five compressor units with 23 700 hp of compression. Ongoing maintenance capital expenditures related to the system are forecast to be less than US$5 million per year.

EQT currently holds approximately 76 000 net acres in northern West Virginia that surround the acquired gathering system, including 59 000 net undeveloped acres. As of 31 December, 2014, there were 199 Marcellus wells and 20 Upper Devonian wells being serviced by the gathering system, with an average daily gathered volume of approximately 410 million ft3/d.

The terms of the acquisition were approved by the Conflicts Committee of the board of directors of EQT Midstream Services, LLC, the general partner of the Partnership (General Partner), which is comprised entirely of independent directors. The committee was advised by Evercore Group LLC regarding financial matters; and Richards, Layton & Finger P.A. regarding legal matters. The General Partner and its affiliates were advised by Baker Botts LLP regarding legal matters.

Adapted from press release by Hannah Priestley-Eaton

Published on 11/03/2015

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