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EQT Midstream Partners Reports Fourth Quarter 2012 Results

Stocks in this article: EQM EQT

Reimbursable Maintenance

Plugging and abandonment and bare steel replacement capital expenditures are referred to as reimbursable maintenance capital expenditures in the Reconciliation table in the Non-GAAP Disclosures section of this press release.

Plugging and abandonment

EQT has agreed, for ten years following the IPO, to reimburse the Partnership for plugging and abandonment expenditures associated with certain identified wells. Plugging and abandonment capital expenditures totaled $1.5 million in the fourth quarter and totaled $1.6 million since IPO. EQT reimbursed the Partnership for $1.6 million related to plugging and abandonment in 2012.

Bare Steel Replacement Program

EQT has agreed, for ten years following the IPO, to reimburse the Partnership for bare steel replacement capital expenditures in the event that ongoing maintenance capital expenditures and bare steel capital expenditures exceed $17.2 million in any calendar year. EQT Corporation will reimburse the Partnership for the lesser of (i) the amount of bare steel replacement capital expenditures during such year; and (ii) the amount by which such ongoing maintenance capital expenditures and bare steel capital expenditures exceed $17.2 million. Fourth quarter 2012 bare steel capital expenditures totaled $4.3 million.

In 2012, ongoing maintenance capital expenditures totaled $13.8 million and bare steel replacement capital expenditures (post-IPO) totaled $6.1 million, for a total of $19.9 million. As a result, the bare steel reimbursement was $2.7 million in 2012.

The Partnership forecasts ongoing maintenance capital expenditures of $17.2 million plus bare steel capital expenditures of $6.0 million in 2013, which results in a forecasted reimbursement of $6.0 million in 2013.

Funded Regulatory Compliance

Funded regulatory compliance capital expenditures relate to discrete expenditures necessary to comply with certain regulatory and other legal requirements. The Partnership has identified two specific regulatory compliance initiatives, system segmentation and isolation; and valve pit remediation. In order to fund these two initiatives, the Partnership retained $32 million from the IPO. Funded regulatory compliance capital expenditures do not impact the calculation of distributable cash flow. Fourth quarter 2012 included $3.8 million of funded regulatory compliance capital expenditures. Since the IPO, the Partnership has incurred $6.8 million of funded regulatory compliance capital expenditures and forecasts $12 million in 2013.

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