EQT Midstream Buys Gas Pipeline System for $1.2B

HOUSTON (The Deal) -- Pittsburgh natural gas storage provider EQT Midstream Partners (EQM) said after the markets closed Wednesday that it agreed to buy the Jupiter natural gas pipeline system from affiliate EQT Corp. (EQT) for $1.18 billion.

The price includes $1.121 billion in cash and $59 million in common and general partner units.

Separately, EQT Midstream Partners said it plans to fund part of the purchase price with an offering of up to 10.05 million units led by Barclays, Bank of America Merrill Lynch, Citigroup, Wells Fargo Securities, Credit Suisse, Deutsche Bank Securities, Goldman, Sachs & Co., JP Morgan and RBC Capital Markets.

EQT Corp. also said it will exchange assets with Range Resources (RRC) of Forth Worth, Texas. EQT will get Range's 73,000 net acres in the Permian Basin, mostly held by production, and 900 producing wells in Glasscock and Sterling Counties, Texas, while Range will get EQT's interest in 138,000 net acres and a gathering system in the Nora Field of Virginia, giving it 100% ownership of Nora, and $145 million in cash. Closing of that deal is expected this quarter.

Range revealed the potential sale in a Securities and Exchange Commission filing in December and said it had hired Bank of America to advise it. It's expected to redirect the proceeds to its prospects in the Marcellus Shale. Scott Van Bergh, Mark Sooby and Ben Lett led the auction.

Analysts at Tudor, Pickering, Holt & Co. Securities Inc. said the structure of Range's Permian sale was not exactly what it was expecting, but the valuation appears to be in the ballpark of the firm's $550 million to $600 million estimate. Simmons & Co. International said the economic value looks to be fair and higher than its expectations.

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