EQT Corporation EQT and EQT Midstream Partners, LP EQM have entered into an agreement according to which the latter will takeover the former’s Northern West Virginia Marcellus Gathering System as well as a preferred interest in an EQT subsidiary. The transaction is valued at about $1.05 billion.
EQT will receive cash proceeds of $997.5 million and $52.5 million in common and general partner units. Additionally, the partnership will fund system expansion projects worth around $370 million over the next several years.
The gathering system has been so designed and constructed that it can gather natural gas production from both the wet gas and dry gas regions of the Marcellus. It lays special emphasis on the Saturn, Mercury, Pandora and Pluto development areas of the same.
The gathering system is made up of approximately 70 miles of natural gas gathering pipeline and nine compressor units with 25,000 horsepower of compression. Moreover, the system consists of a 30-mile, high-pressure wet gas header pipeline that transfers wet gas from the development areas to the MarkWest Mobley processing facility. EQT has been contracted for a decade of firm capacity on the system.
Over the coming years, EQT Midstream Partners, LP is likely to install about 100 miles of gathering pipeline and five compressor units with 23,700 horsepower of compression. The system related ongoing maintenance capital expenditures are not expected to exceed $5 million per year.
At present, approximately 76,000 net acres in northern West Virginia that surround the acquired gathering system, together with 59,000 net undeveloped acres are held by EQT. As of Dec 31, 2014, the gathering system serviced 199 Marcellus wells and 20 Upper Devonian wells, with an average daily gathered volume of about 410 thousand cubic feet per day.
EQT Corp currently carries a Zacks Rank #5 (Strong Sell). Better-ranked stocks from the oil and gas sector include Valero Energy Partners L.P. VLP and Hallador Energy Co. HNRG. Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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