PITTSBURGH, Nov. 25,
2024 /PRNewswire/ -- EQT Corporation (NYSE: EQT)
announced today that it has entered into a definitive agreement
with funds managed by Blackstone
Credit & Insurance ("BXCI"), to form a new midstream
joint venture (the "JV") consisting of EQT's ownership interest in
high quality contracted infrastructure assets: (i) Mountain Valley
Pipeline, LLC – Series A, (ii) FERC regulated transmission and
storage assets, and (iii) the Hammerhead
Pipeline.(1)
Under the terms of the agreement BXCI will provide EQT
$3.5 billion of cash consideration in
exchange for a non-controlling common equity interest in the JV.
The investment implies a total JV valuation of approximately
$8.8 billion, or 12x
EBITDA.(2) The JV provides EQT with a large-scale equity
capital solution at an accretive cost of capital. Additionally, EQT
will retain the rights to growth projects associated with the
assets contributed to the JV, including the planned Mountain Valley
Pipeline ("MVP") expansion and the MVP Southgate project.
EQT plans to use proceeds from this transaction to pay down its
term loan and revolving credit facility and redeem and tender for
senior notes. Pro-forma for this transaction, along with the recent
announcement of the divesture of its remaining non-operated assets
in northeast Pennsylvania, EQT
expects to exit 2024 with approximately $9
billion of net debt.(3)
EQT has posted a presentation to its investor relations website
with more details on the transaction.
EQT President and CEO Toby Z.
Rice stated, "This transaction underscores the
ultra-high-quality nature of EQT's regulated midstream assets,
which service one of the strongest power demand growth regions in
the United States underpinned by
long-term contracts with the region's leading utilities.
Importantly, through this joint venture EQT preserves the
benefits of the Equitrans acquisition by retaining the long-term
value from synergy capture and growth projects. We look forward to
working with Blackstone to optimize the value of these assets and
together explore strategic opportunities across its leading
portfolio of energy, power and digital infrastructure in the years
ahead."
EQT Chief Financial Officer Jeremy
Knop stated, "Blackstone is a leader in providing capital
solutions to large corporations and we are thrilled to partner with
them in this unique transaction, crafting a tailor-made equity
financing solution at a price significantly below EQT's equity cost
of capital while preserving key tax attributes. When we announced
the Equitrans acquisition earlier this year, we made an unwavering
commitment to debt reduction. We have now delivered on that
promise, with announced divestitures to date totaling $5.25 billion of projected cash proceeds, above
the high-end of our $3-$5 billion asset sale target, and several
quarters ahead of schedule."
Robert Horn, Global Head of
Infrastructure & Asset-Based Credit at BXCI stated, "EQT is one
of the leading energy and infrastructure companies in North America, and we are delighted to partner
with them on this transaction and future growth. The transaction
highlights Blackstone's focus on providing large scale and flexible
high-grade capital solutions to the world's leading
corporations."
Rick Campbell, Managing Director
at BXCI, added, "These critical midstream assets benefit from
strong tailwinds as demand for energy, particularly natural gas,
continues to grow. Blackstone's scale and expertise in this high
conviction sector allowed us to create what we believe is a
compelling opportunity for both EQT and our investors."
The transaction is subject to customary closing adjustments,
required regulatory approvals and clearances, and is expected to
close in the fourth quarter of 2024.
(1) The Hammerhead Pipeline is a 1.6
billion cubic feet per day gathering header pipeline primarily
designed to connect natural gas produced in Pennsylvania and West Virginia to MVP, Texas Eastern
Transmission and Eastern Gas Transmission.
(2) JV valuation derived by dividing projected
2025-2029 average JV free cash flow by target return. EBITDA
multiple derived by dividing JV valuation by projected 2025-2029
average JV EBITDA.
(3) A non-GAAP financial measure. See the Non-GAAP
Disclosures section of this news release for the definition of, and
other important information regarding, this non-GAAP financial
measure.
Advisors
RBC Capital Markets, LLC acted as financial
advisor to EQT. Kirkland & Ellis LLP is serving as EQT's legal
counsel on the transaction.
Citi acted as financial advisor to Blackstone. Milbank LLC is
serving as Blackstone's legal counsel on the transaction.
EQT Investor Contact
Cameron
Horwitz
Managing Director, Investor Relations & Strategy
412.445.8454
Cameron.Horwitz@eqt.com
Blackstone Contact
Thomas
Clements
Senior Vice President, Public Affairs
646.482.6088
Thomas.Clements@blackstone.com
About EQT Corporation
EQT Corporation is a premier,
vertically integrated American natural gas company with production
and midstream operations focused in the Appalachian Basin. We are
dedicated to responsibly developing our world-class asset base and
being the operator of choice for our stakeholders. By leveraging a
culture that prioritizes operational efficiency, technology and
sustainability, we seek to continuously improve the way we produce
environmentally responsible, reliable and low-cost energy. We have
a longstanding commitment to the safety of our employees,
contractors, and communities, and to the reduction of our overall
environmental footprint. Our values are evident in the way we
operate and in how we interact each day – trust, teamwork, heart,
and evolution are at the center of all we do. To learn more, visit
eqt.com.
About Blackstone Credit &
Insurance
Blackstone Credit
& Insurance ("BXCI") is one of the world's leading credit
investors. Our investments span the credit markets, including
private investment grade, asset based lending, public investment
grade and high yield, sustainable resources, infrastructure debt,
collateralized loan obligations, direct lending and opportunistic
credit. We seek to generate attractive risk-adjusted returns for
institutional and individual investors by offering companies
capital needed to strengthen and grow their businesses. BXCI is
also a leading provider of investment management services for
insurers, helping those companies better deliver for policyholders
through our world-class capabilities in investment grade private
credit.
Non-GAAP Disclosures
This news release includes
the non-GAAP financial measure described below. The non-GAAP
measure is intended to provide additional information only and
should not be considered as an alternative to, or more meaningful
than total debt or any other measure calculated in accordance with
GAAP. Certain items excluded from the non-GAAP measure are
significant components in understanding and assessing a company's
financial performance, such as a company's cost of capital, tax
structure, and historic costs of depreciable assets.
Net Debt
Net debt is defined as total debt less cash
and cash equivalents. Total debt includes the Company's current
portion of debt, revolving credit facility borrowings, term loan
facility borrowings and senior notes. The Company's management
believes net debt provides useful information to investors
regarding the Company's financial condition and assists them in
evaluating the Company's leverage since the Company could choose to
use its cash and cash equivalents to retire debt.
The Company has not provided a reconciliation of projected net
debt to projected total debt, the most comparable financial measure
calculated in accordance with GAAP. The Company is unable to
project total debt for any future period because total debt is
dependent on the timing of cash receipts and disbursements that may
not relate to the periods in which the operating activities
occurred. The Company is unable to project these timing differences
with any reasonable degree of accuracy and therefore cannot
reasonably determine the timing and payment of credit facility
borrowings or other components of total debt without unreasonable
effort. Furthermore, the Company does not provide guidance with
respect to its average realized price, among other items that
impact reconciling items between certain of the projected total
debt and projected net debt, as applicable. Natural gas prices are
volatile and out of the Company's control, and the timing of
transactions and the distinction between cash on hand as compared
to credit facility borrowings are too difficult to accurately
predict. Therefore, the Company is unable to provide a
reconciliation of projected net debt to projected total debt,
without unreasonable effort.
Cautionary Statements Regarding Forward-Looking
Statements
This news release contains 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, 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 EQT
Corporation ("EQT") and its consolidated subsidiaries
(collectively, the "Company"), including expectations regarding the
Company's year-end net debt; guidance regarding the proposed JV;
the governance, operating and financial terms of the JV, and the
anticipated closing date thereof, if at all; statements regarding
potential future growth projects, including regarding the planned
MVP expansion and MVP Southgate project; and EQT's intended use of
the proceeds from the contribution of assets to the JV and other
monetization transactions.
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. The Company has based these
forward-looking statements on current expectations and assumptions
about future events, taking into account all information currently
known by the Company. While the Company 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 the Company's control. These risks and
uncertainties include, but are not limited to, volatility of
commodity prices; the costs and results of drilling and operations;
uncertainties about estimates of reserves, identification of
drilling locations and the ability to add proved reserves in the
future; the assumptions underlying production forecasts; the
quality of technical data; the Company's ability to appropriately
allocate capital and other resources among its strategic
opportunities; access to and cost of capital; the Company's hedging
and other financial contracts; inherent hazards and risks normally
incidental to drilling for, producing, transporting and storing
natural gas, natural gas liquids ("NGLs") and oil; operational
risks and hazards incidental to the gathering and transmission and
storage of natural gas as well as unforeseen interruptions;
cybersecurity risks and acts of sabotage; availability and cost of
drilling rigs, completion services, equipment, supplies, personnel,
oilfield services and sand and water required to execute the
Company's exploration and development plans, including as a result
of supply chain and inflationary pressures; risks associated with
operating primarily in the Appalachian Basin; the ability to obtain
environmental and other permits and the timing thereof;
construction, business, economic, competitive, regulatory,
judicial, environmental, political and legal uncertainties related
to the development and construction by the Company or its joint
ventures of pipeline and storage facilities and transmission assets
and the optimization of such assets; the Company's ability to renew
or replace expiring gathering, transmission or storage contracts at
favorable rates, on a long-term basis or at all; risks relating to
the Company's joint venture arrangements, including the proposed
JV; government regulation or action, including regulations
pertaining to methane and other greenhouse gas emissions; negative
public perception of the fossil fuels industry; increased consumer
demand for alternatives to natural gas; environmental and weather
risks, including the possible impacts of climate change; risks
related to the Company's ability to integrate the operations of
Equitrans in a successful manner and in the expected time period
and the possibility that any of the anticipated benefits and
projected synergies of the Equitrans Midstream Merger will not be
realized or will not be realized within the expected time period;
and disruptions to the Company's business due to acquisitions,
divestitures and other strategic transactions. These and other
risks are described under the "Risk Factors" section in EQT's
Annual Report on Form 10-K for the year ended December 31, 2023, the "Risk Factors" section
included in EQT's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2024, and other documents EQT files
from time to time with the Securities and Exchange Commission (the
"SEC").
Any forward-looking statement speaks only as of the date on
which such statement is made, and, except as required by law, EQT
does not intend to correct or update any forward-looking statement,
whether as a result of new information, future events or
otherwise.
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SOURCE EQT Corporation (EQT-IR)