EQT Midstream Partners reports 2014 results

EQT Midstream Partners, LP (EQM), an EQT Corporation (EQT) company, has announced full-year and fourth quarter 2014 financial and operating results. For the year, net income totalled US$232.8 million, while adjusted EBITDA was US$255.6 million and distributable cash flow was US$229.5 million. Net income for the quarter totalled US$74.7 million and adjusted EBITDA was US$85.9 million. Distributable cash flow was US$76.2 million for the quarter. Adjusted operating income was US$78.3 million, or 39% higher than the same quarter in 2013.

2014 highlights

In December 2013, EQT Midstream Partners, LP (Partnership) entered into a capital lease with EQT for the lease of its Allegheny Valley Connector facilities (AVC), which includes a 200 mile pipeline regulated by the Federal Energy Regulatory Commission (FERC). The Partnership operates the AVC and the related revenues and expenses are included in the Partnership's financial statements; however, the monthly lease payment to EQT offsets the impact on the Partnership's distributable cash flow. As a result, fourth quarter 2014 operating results are discussed on an adjusted basis, excluding the AVC. Payments due under the lease totalled US$7.0 million for the fourth quarter and US$21.8 million for the full-year.

Fourth quarter adjusted operating revenues increased US$23.3 million, or 29%, compared to the same quarter in the previous year. The increase was primarily due to increased contracted firm transmission capacity and throughput from third parties and EQT. Adjusted operating expenses increased US$1.5 million versus the fourth quarter of 2013, consistent with the growth of the business.

Capital expenditures

Expansion

During the fourth quarter, the Partnership placed two transmission expansion projects in service; the 100 million ft³/d west side expansion for Antero Resources and a 100 million ft³/d expansion for Range Resources. As of year-end 2014, the Partnership's total transmission capacity was 3.0 billion ft³/d. Fourth quarter capital expenditures related to these expansion projects totalled US$19.6 million.

The Partnership also invested approximately US$17.8 million in the Ohio Valley Connector (OVC) project in the fourth quarter. The OVC is estimated to cost $300 million, of which approximately US$120 – US$130 million will be invested in 2015.

In the fourth quarter, the Partnership installed 350 million ft³/d of compression capacity on the Jupiter gathering system, bringing total compression capacity on the Jupiter system to 575 million ft³/d. Jupiter-related capital expenditures totalled US$45.1 million during the fourth quarter. Expansion capital expenditures totalled US$221.9 million in 2014 and US$90.3 million in the fourth quarter. The Partnership reiterates its 2015 forecast for total expansion capital expenditures, including capital contributions to Mountain Valley Pipeline, LLC, of approximately US$380 – US$410 million.

Ongoing maintenance

Ongoing maintenance capital expenditures are cash expenditures made to maintain, over the long-term, the Partnership's operating capacity or operating income. Ongoing maintenance capital expenditures, net of expected reimbursements, totalled US$15.2 million in 2014 and US$4.6 million in the fourth quarter.

Project updates

Ohio Valley Connector

The OVC will extend the Partnership's transmission and storage system from Wetzel County, West Virginia to Clarington, Ohio, where the pipeline will interconnect with the Texas Eastern and Rockies Express pipelines. The pipeline will provide approximately 1 billion ft³/d of transmission capacity, of which 650 million ft³/d is contracted for 20 years. In December 2014, the Partnership submitted the OVC certificate application, which also includes related transmission expansion projects, to the FERC and anticipates receiving the certificate in the second half of 2015. The OVC is expected to be in-service by mid-year 2016.

Mountain Valley Pipeline

As previously announced, the Partnership will assume EQT's interest in Mountain Valley Pipeline, LLC, a joint venture with a subsidiary of NextEra Energy, Inc. The Mountain Valley Pipeline (MVP) will extend from the Partnership's transmission and storage system in Wetzel County, West Virginia, to Transco Station 165 in Pittsylvania County, Virginia. The Partnership expects to hold the largest ownership interest in the joint venture and will operate the estimated 300 mile pipeline. Mountain Valley Pipeline, LLC has secured a total of 2 billion ft³/d of firm capacity commitments at 20-year terms, and is currently in negotiation with additional shippers who have expressed interest in the MVP project.

During the fourth quarter 2014, Mountain Valley Pipeline, LLC began the FERC pre-filing process and plans to submit the MVP certificate application to the FERC in the fourth quarter 2015. The pipeline is expected to be in-service during the fourth quarter of 2018.

Adapted from press release by Rosalie Starling

Read the article online at: https://www.worldpipelines.com/business-news/06022015/eqt-midstream-partners-reports-2014-results-106/