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Blackstone in talks to buy US pipeline stakes for US$3.5 billion

Published by , Editorial Assistant
World Pipelines,


Reuters reports that private equity firm Blackstone is in advanced talks to acquire minority stakes in the interstate natural gas pipelines owned by EQT Corp for about US$3.5 billion, people familiar with the matter said on Friday 25 October, 2024.

If the talks are successful, the deal would help the natural gas producer slash the debt pile it accumulated from its acquisition of pipeline operator Equitrans Midstream earlier this year.

Blackstone is planning to make the investment through its credit and insurance arm, the sources said, requesting anonymity as the discussions are confidential. A deal could be signed in the coming weeks if the talks don't fall apart, the sources added.

EQT will continue to operate the pipelines as part of the deal with Blackstone, the sources said.

The transaction would help Blackstone generate steady income that it could deploy into its various investment strategies, while also giving it exposure to energy infrastructure assets, including the controversial Mountain Valley Pipeline, a 300 mile natural gas line running from West Virginia to Virginia.

Mountain Valley entered service in June after a years-long legal battle over its construction. Part of EQT's stake in the entity that owns the pipeline is one of the most significant assets within the portfolio that is being sold.

EQT and Blackstone declined to comment.

Pittsburgh-based EQT holds stakes in 940 miles of interstate pipelines with a capacity of 4.4 billion ft3/d of natural gas, according to a March presentation from the company.

In July, EQT said the pipeline portfolio generated nearly US$700 million of adjusted earnings before interest, tax, depreciation and amortisation.

The transaction with Equitrans helped EQT transition from being an exploration and production company to a full-fledged vertically integrated natural gas provider. However, the deal saddled EQT with a debt pile of nearly US$14 billion.

In July, the company said it planned to cut its debt load by US$5 billion through cash it generated from operations and asset sales. EQT, which has already agreed to divest assets worth US$1.1 billion to Equinor said at the time that it planned to sell minority stakes in the pipelines.

Blackstone is no stranger to energy infrastructure. Its current portfolio includes pipeline operator Tallgrass Energy and a stake in the company that controls the Elba Island liquefied natural gas (LNG) facility.

The New York-based buyout giant, which currently has more than US$1 trillion in assets under management, announced in September 2023 it would merge its credit and insurance arms into a single unit as part of an effort to bolster returns and the value of its managed assets.

Money managers in recent years have been seeking ways to harness low-cost insurance premiums, which they can invest in other higher-return strategies, while ensuring payouts to insurance policyholders.

 

 

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World Pipelines’ October 2024 issue

The October 2024 issue of World Pipelines includes a keynote section on pipelines in the MENA region, plus technical articles on operational technology for pipeline networks, pipeline isolation and intervention, and trenchless technology. We also cover pipeline inspection, pipeline services, and subsea repair.

Read the article online at: https://www.worldpipelines.com/business-news/28102024/blackstone-in-talks-to-buy-us-pipeline-stakes-for-us35-billion/

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