EQT Midstream Partners to Buy EQT Corp's Juniper Gathering System for $1.18B
EQT Corporation (NYSE: EQT) today announced that EQT Midstream Partners, LP (NYSE: EQM) (Partnership) has agreed to acquire EQT's Jupiter natural gas gathering system (Jupiter) for $1.18 billion. EQT will receive $1.12 billion of cash and $59 million of common and general partner units. In addition, the Partnership will fund $182 million of expansion projects related to Jupiter. Two additional announcements include the execution of an agreement to exchange assets with Range Resources Corporation (NYSE: RRC) (Range); and EQT share repurchase authorization.
The Jupiter system gathers EQT's Marcellus production in portions of Greene and Washington Counties, Pennsylvania, and consists of approximately 35 miles of natural gas gathering pipeline and approximately 21,300 horsepower of compression. Jupiter has a total of 970 MMcf per day of pipeline capacity and six interconnects with the Partnership's transmission and storage systems.
The Partnership has agreed to complete several expansion projects related to Jupiter during 2014 and 2015. The 2014 expansions will add approximately 350 MMcf per day of compression capacity, with an in-service date anticipated for the fourth quarter 2014. The 2015 expansion will add approximately 200 MMcf per day of compression capacity, with an in-service date anticipated for the fourth quarter 2015. In addition, the Partnership plans to install approximately 20 miles of pipeline during this time. In total, the compression and gathering expansion projects have an estimated cost of approximately $182 million.
The Jupiter assets are supported by a gathering agreement with EQT that includes 10-year firm capacity reservation commitments. The contracted capacity is initially 225 MMcf per day and will grow to 775 MMcf per day by the end of 2015. EQT will also pay a per-unit fee for volume above the contracted capacity; and expects full-year 2014 firm reservation charges and usage fees to be approximately $130 million. Operating expenses, excluding depreciation and amortization, are forecast to be approximately $20 million in 2014.
EQT currently holds approximately 48,000 net acres surrounding Jupiter, including approximately 31,000 undeveloped net acres. As of March 31, 2014, a total of 206 Marcellus and 9 Upper Devonian wells were drilled in the Jupiter service area. Jupiter's average daily gathered volume for the first quarter 2014 was approximately 595 MMcf per day.
Asset Exchange Agreement with Range Resources
EQT will receive approximately 73,000 net acres in the Permian Basin, most of which is held by production, along with approximately 900 producing wells in Glasscock and Sterling Counties, Texas. This Permian Basin acreage has multiple horizontal, stacked pay drilling opportunities in the Upper Wolfcamp, Lower Wolfcamp, and Cline horizons. During 2014, EQT expects to drill two horizontal wells on the newly acquired acreage, with tentative plans to drill 20 – 30 horizontal wells in 2015. The existing wells, most of which are vertical, are currently producing approximately 28 MMcfe (4,800 BOE) per day, with 62% being liquids. Additional development is expected to reach 75% liquids.
In exchange, Range will receive EQT's interest in 138,000 net acres and the supporting gathering system in the Nora Field of Virginia, giving Range 100% ownership of Nora. In addition, Range will receive $145 million cash. The Nora Field properties, primarily coalbed methane, are currently producing approximately 41 MMcfe per day.
The exchange is subject to satisfaction of customary closing conditions, final due diligence and post-closing purchase price adjustments. The transaction is anticipated to close in the second quarter of 2014. Additional information on the Permian assets can be found in EQT's updated analyst presentation, which is available at www.eqt.com.
EQT Share Repurchase Authorization
EQT's Board of Directors has approved a share repurchase authorization of up to 1 million shares. Under the authorization, EQT may repurchase shares of its outstanding common stock in the open market or in privately negotiated transactions, and may do so over a period of time and in a series of transactions. The Company has not established a target number of shares to repurchase and will not forecast the amount or timing of share repurchases, if any.
EQT Quarterly Dividend
EQT's Board of Directors has declared a quarterly cash dividend of $0.03 per share, payable June 1, 2014, to shareholders of record at the close of business on May 16, 2014.
About EQT Corporation:
EQT Corporation is an integrated energy company with emphasis on Appalachian area natural gas production, gathering, and transmission. EQT is the general partner and significant equity owner of EQT Midstream Partners, LP. With more than 125 years of experience, EQT continues to be a leader in the use of advanced horizontal drilling technology – designed to minimize the potential impact of drilling-related activities and reduce the overall environmental footprint. Through safe and responsible operations, the Company is committed to meeting the country's growing demand for clean-burning energy, while continuing to provide a rewarding workplace and enrich the communities where its employees live and work. Company shares are traded on the New York Stock Exchange as EQT.
Visit EQT Corporation at www.EQT.com.
About EQT Midstream Partners:
EQT Midstream Partners, LP is a growth-oriented limited partnership formed by EQT Corporation to own, operate, acquire, and develop midstream assets in the Appalachian basin. The Partnership provides midstream services to EQT Corporation and third-party companies through its strategically located transmission and storage system, and gathering system. The Partnership owns 700 miles and operates an additional 200 miles of FERC-regulated interstate pipelines, and also owns more than 1,600 miles of FERC-regulated, low-pressure gathering lines.
Visit EQT Midstream Partners, LP at www.eqtmidstreampartners.com
About Range Resources:
RANGE RESOURCES CORPORATION (NYSE: RRC) is a leading independent oil and natural gas producer with operations focused in Appalachia and the Midcontinent region of the United States. The Company pursues an organic growth strategy targeting high return, low-cost projects within its large inventory of low risk, development drilling opportunities. The Company is headquartered in Fort Worth, Texas. More information about Range can be found at http://www.rangeresources.com/ and http://www.myrangeresources.com/.
EQT has no obligation to repurchase any amount of its common stock. EQT intends to make all repurchases and to administer the plan in accordance with applicable laws and regulatory guidelines, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended.
Disclosures in this news release contain certain forward-looking statements. Statements that do not relate strictly to historical or current facts are forward-looking. Without limiting the generality of the foregoing, forward-looking statements contained in this news release specifically include the expectations of plans, strategies, objectives and growth and anticipated financial and operational performance of the Company and its subsidiaries, including guidance regarding the Company's strategy to develop its reserves; drilling plans and programs (including the number and type of wells to be drilled); projected liquids content; projected firm reservation charges and usage fees; projected operating expenses; infrastructure programs (including the timing, cost, capacity and sources of funding with respect to such programs); projected compression capacity; monetization and other transactions, including the Company's ability to complete the sale of the Jupiter natural gas gathering system (Jupiter) to the Partnership and the asset exchange with Range; uses of capital provided by the Jupiter transaction; projected capital expenditures; liquidity and financing requirements, including funding sources for the asset exchange with Range; and the amount and timing of any share repurchases under the Company's share repurchase authorization. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The Company has based these forward-looking statements on current expectations and assumptions about future events. While the Company considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company's control. With respect to the proposed Jupiter and Range transactions, these risks and uncertainties include, among others, disruption to the Company's business, including customer, employee and supplier relationships resulting from the transactions and risks that the conditions to closing may not be satisfied. The risks and uncertainties that may affect the operations, performance and results of the Company's business and forward-looking statements include, but are not limited to, those risks discussed in the Company's most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q and other filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which such statement is made and the Company does not intend to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise.
Information in this news release regarding the Partnership and its subsidiaries is derived from publicly available information published by the Partnership.
EQT Corporation Analyst inquiries please contact: Patrick Kane – Chief Investor Relations Officer, 412-553-7833 email@example.com or Nate Tetlow – Manager, Investor Relations, 412-553-5834 firstname.lastname@example.org or Media inquiries please contact: Natalie Cox – Corporate Director, Communications, 412-395-3941 email@example.com
Source: EQT Corporation
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