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  4. EQM Midstream Partners announces strategic acquisition

EQM Midstream Partners announces strategic acquisition

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World Pipelines,

Equitrans Midstream Corporation and EQM Midstream Partners have announced that EQM has entered into a definitive agreement with a fund managed by Morgan Stanley Infrastructure Partners to acquire a 60% interest in Eureka Midstream Holdings, LLC and a 100% interest in Hornet Midstream Holdings, LLC for total consideration of US$1030 million, comprised of approximately US$860 million in cash and approximately US$170 million of assumed pro-rata debt. The proposed acquisition is expected to close on or about 15 April 2019, subject to customary regulatory and other closing conditions.

“This bolt-on acquisition, within our footprint, leverages our existing assets and core operating competencies and is the first step in executing our strategy to grow into a top-tier midstream company,” said Thomas F. Karam, Chief Executive Officer of EQM. “These assets will complement EQM’s basin-leading gathering and transmission system, allowing us to continue being the low-cost provider for gas transportation and, increasingly, for water handling as well. As we continue to implement our plan, we are committed to maintaining our strong balance sheet and to delivering shareholder value.”

“The Eureka team did a tremendous job in building out the system during the last few years and attracting a strong mix of producer customers,” added Diana M. Charletta, Chief Operating Officer of EQM. “With the ongoing natural gas development activity surrounding the Eureka system, we see significant value in leveraging our fast-growing water services business. We want to be the low-cost provider and partner of choice across all aspects of our business. This acquisition will help us achieve our goal by providing added scale and by allowing us to facilitate new commercial opportunities to deliver innovative and cost-effective solutions for our customers.”

Asset overview

Eureka Midstream is a 190 mile gathering header pipeline system in Ohio and West Virginia that services both dry Utica and wet Marcellus production. Hornet Midstream is a 15 mile, high-pressure gathering system in West Virginia that connects to the Eureka system.

Asset highlights

  • Averaged approximately 1.6 billion ft3/d gathered volume during 4Q18.
  • Minimum volume commitments (MVCs) of 0.8 billion ft3/d and growing to 1.3 billion ft3/d by 2021.
  • Volume mix of 67% dry gas and 33% wet gas.
  • Approximately 200 000 acres dedicated in core Marcellus and Utica.
  • Multiple producer customers with 17-year weighted average contract life.
  • Several interstate pipeline interconnects and access to four major processing plants.
  • Access to EQM system and downstream pipelines at Clarington, Ohio and Mobley, West Virginia.

Combined, the gathering system assets and complementary water services opportunities are expected to generate approximately US$100 million of EQM EBITDA during the first 12 months. EQM forecasts that the acquired assets and corresponding water services will achieve greater than 20% annual EBITDA growth over the next several years. The transaction is expected to be neutral to EQM distributable cash flow over the first 12 months and accretive thereafter.

Read the article online at: https://www.worldpipelines.com/business-news/15032019/eqm-midstream-partners-announces-strategic-acquisition/

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