EQT To Sell Gas Utility For $720 Million Cash -- Plus Marcellus Midstream Assets
EQT Corporation (NYSE: EQT) today announced that it has entered into a
definitive agreement for the transfer of its natural gas distribution
business, Equitable Gas Company, LLC, to Peoples Natural Gas.
EQT Corporation (NYSE: EQT) today announced that it has entered into a definitive agreement for the transfer of its natural gas distribution business, Equitable Gas Company, LLC, to Peoples Natural Gas. As part of the transaction, EQT will receive cash proceeds of $720 million, subject to certain purchase price adjustments, and select midstream assets and commercial arrangements, which are expected to generate at least $40 million in EBITDA (earnings before interest, taxes, depreciation, and amortization) per year. Concurrent with this announcement, EQT will also reduce its annual dividend, effective January 2013. The new dividend rate of $0.12 per share reflects the blend of EQT’s two remaining core businesses – a dividend-supporting midstream business, and a capital-intensive, rapidly growing production business. “Today’s announcement allows us to focus on and reinvest in our rapidly growing natural gas production and midstream businesses. The proposed transaction provides capital to accelerate the monetization of our reserves beyond 2013 and also adds to our Marcellus midstream assets,” stated David Porges, Chief Executive Officer of EQT Corporation. As part of the transaction, EQT will receive approximately 200 miles of regulated transmission pipelines, as well as four storage pools that have a total of 15.1 Bcf working gas capacity. These assets are strategically located across multiple counties in Pennsylvania and connect to EQT’s existing transmission assets, which will increase the Company’s transportation and storage capabilities. Peoples Gas has also agreed to enter long-term contracts for gas transmission, supply, and storage services with EQT. These agreements will secure supply of local, Marcellus gas of approximately 35 Bcf per year to Peoples. Morgan O’Brien, President and CEO of Peoples Natural Gas states, “The combined utility will yield substantial benefits to the Western Pennsylvania community by creating significant operational efficiencies, relative to the pipeline systems; promoting greater competition for gas marketers; and continuing to support local gas producers.” O’Brien continues, “Combining the companies’ respective pipeline systems will result in a more streamlined and efficient operating system for customers. Furthermore, the greater aggregation of customers will be more attractive to marketers and is expected to attract more marketers that will create greater competition for customers’ supply needs.”