Market Overview

Equitrans Midstream to Acquire 100% Ownership of EQGP through Negotiated Purchases and Limited Call Right


Commencement of Structure Simplification Plans, Including
Elimination of IDRs

Equitrans Midstream Corporation (NYSE:ETRN) today announced that it has
entered into definitive purchase agreements with certain unitholders of
EQGP Holdings, LP (NYSE:EQGP) to acquire limited partner interests in
EQGP (EQGP Common Units) for $20.00 per unit in cash (Private
Purchases), which is a 17.5% premium to the EQGP closing market price as
of November 29, 2018. The Private Purchases are expected to close on or
about December 31, 2018, after which ETRN and its affiliates will own
more than 95% of the outstanding EQGP Common Units.

Upon closing of the Private Purchases, ETRN intends to exercise the
Limited Call Right under EQGP's partnership agreement to acquire all
remaining EQGP Common Units not then owned by ETRN and its affiliates.
If the Limited Call Right is exercised, the remaining holders of EQGP
Common Units will receive at least the same cash price per unit that
will be paid in the Private Purchases. The Limited Call Right is
expected to close in January 2019 and will be a taxable transaction for
EQGP unitholders.

ETRN intends to use the cash proceeds from a newly issued Term Loan B to
finance the Private Purchases and the purchases pursuant to the Limited
Call Right. ETRN has secured committed financing in support of these

ETRN also announced that it has made a proposal to EQM Midstream
Partners, LP (NYSE:EQM) for the exchange of its incentive distribution
rights (IDR) and the economic general partner interest in EQM for 95
million units in EQM and a non-economic general partner interest in EQM,
subject to the closing of the Private Purchases and completion of the
Limited Call Right (Proposed IDR Transaction). ETRN expects that a
portion of the units received will be in the form of Payment-In-Kind
Units (PIK Units). The PIK Units would receive distributions in the form
of additional PIK Units and would convert on a one-to-one basis into
common units representing limited partner interests in EQM at a date to
be determined. Final terms of the Proposed IDR Transaction are subject
to negotiation with the board of directors of EQM's general partner or
its conflicts committee (EQM Conflicts Committee), and assuming an
agreement is reached, ETRN expects that the Proposed IDR Transaction
would close in the first quarter of 2019.

Upon completion of the Private Purchases, the Limited Call Right, and
the Proposed IDR Transaction, ETRN will have accomplished a full
simplification of EQGP and EQM, resulting in a projected 61% ownership
of EQM. Additionally, EQM will be the only publicly traded partnership
under ETRN and is expected to benefit from the elimination of the IDR
burden, as well as stronger coverage and balance sheet metrics.

"Today's announcement demonstrates our commitment to addressing the IDR
overhang in a timely manner and executing transactions that provide
significant benefits for all stakeholders," said Thomas F. Karam, chief
executive officer of ETRN, EQGP, and EQM. "Executing on these
transactions clears the way for a stable EQM, with 6% to 8% annual
distribution growth; and is a strong, strategic starting point for ETRN
to grow the annual dividend over the long-term by 8% to 10%."

EQM Highlights

  • The proposed transactions would not result in a distribution cut for
    EQM unitholders
  • Targeting 6% – 8% annual distribution growth beginning in 2019
  • 2019 distribution coverage in excess of 1.0x
  • Long-term distribution coverage target in excess of 1.2x beginning in
  • Long-term debt to EBITDA target of 3.5x – 4.0x beginning in 2020
  • PIK Units will provide balance sheet and coverage support
  • Improves cost of capital
  • No equity issuance is required to fund capital projects for the next
    several years
  • Reduces corporate overhead associated with the elimination of a
    publicly traded entity


ETRN expects that the EQM Conflicts Committee will review the Proposed
IDR Transaction. Unitholder voting is not required in connection with
the Private Purchases, the exercise of the Limited Call Right, or the
Proposed IDR Transaction.

Presentation Materials

An investor presentation regarding the transactions will be made
available on the presentations page of the ETRN investor relations
website at


Guggenheim Securities, LLC and Goldman Sachs & Co. LLC acted as
financial advisors to ETRN. Both advisors also provided committed
financing in support of the Private Purchases and the exercise of the
Limited Call Right. Baker Botts L.L.P. acted as legal counsel to ETRN.

About Equitrans Midstream Corporation

Equitrans Midstream Corporation (ETRN) has a premier asset footprint in
the Appalachian Basin and is one of the largest natural gas gatherers in
the United States. With a rich 135-year history in the energy industry,
ETRN was launched as a standalone company in 2018 and, through its
subsidiaries, has an operational focus on gas gathering systems,
transmission and storage systems, and water services assets that support
natural gas producers across the Basin. ETRN is helping to meet
America's growing need for clean-burning energy and strives to provide a
rewarding workplace and enrich the communities where its employees live
and work. ETRN owns the general partner interest and a 91.3% limited
partner interest in EQGP Holdings, LP (NYSE:EQGP) and a 12.7% limited
partner interest in EQM Midstream Partners, LP (NYSE:EQM). EQGP owns
the general partner interest, all of the incentive distribution rights,
and a 17.9% limited partner interest in EQM.

For more information on Equitrans Midstream Corporation, visit

About EQM Midstream Partners

EQM Midstream Partners, LP (EQM) is a growth-oriented limited
partnership formed to own, operate, acquire, and develop midstream
assets in the Appalachian Basin. As the third largest gatherer of
natural gas in the United States, EQM provides midstream services to
producers, utilities, and other customers through its strategically
located natural gas transmission, storage, and gathering systems, and
water services to support energy development and production in the
Marcellus and Utica regions. EQM owns approximately 950 miles of
FERC-regulated interstate pipelines and approximately 2,130 miles of
high- and low-pressure gathering lines.

For more information on EQM Midstream Partners, LP, visit

About EQGP Holdings

EQGP Holdings, LP (EQGP) is a limited partnership that owns the general
partner interest, all of the incentive distribution rights, and a
portion of the limited partner interests in EQM Midstream Partners, LP.
Equitrans Midstream Corporation owns the general partner interest and a
91.3% limited partner interest in EQGP.

For more information on EQGP Holdings, LP, visit

Cautionary Statements

Disclosures in this news release contain certain forward-looking
statements within the meaning of Section 21E of the Securities Exchange
Act of 1934, as amended, and Section 27A of the Securities Act of 1933,
as amended. 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 expected exercise of the Limited Call Right and
closing of the Private Purchases, the Limited Call Right, and the
Proposed IDR Transaction; the expectations regarding the review by the
EQM conflicts committee of the Proposed IDR Transaction; whether the
transactions will provide stability and enhanced long-term growth for
ETRN and EQM equity holders; the benefits of PIK Units; the expected
growth rates for ETRN dividends and EQM distributions; liquidity and
financing requirements, including funding sources and availability;
projected coverage ratio and leverage; and the expected terms of the
Proposed IDR Transaction and ultimate EQM ownership by ETRN. These
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. ETRN has based these forward-looking
statements on current expectations and assumptions about future events.
While ETRN considers these expectations and assumptions to be
reasonable, they are inherently subject to significant business,
economic, competitive, regulatory and other risks and uncertainties,
many of which are difficult to predict and beyond ETRN's control. The
risks and uncertainties that may affect the operations, performance and
results of ETRN's business and forward-looking statements include, but
are not limited to, those risks discussed in ETRN's Registration
Statement on Form 10 and other filings with the Securities and Exchange

Any forward-looking statement speaks only as of the date on which such
statement is made and ETRN 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 EQGP and its subsidiaries,
including EQM, is derived from publicly available information published
by the partnerships.


As used in this news release, EBITDA means net income attributable to
EQM plus net interest expense, depreciation, amortization of intangible
assets, payments on EQM's preferred interest in EQT Energy Supply, LLC
(Preferred Interest), non-cash long-term compensation expense and
transaction costs less equity income, AFUDC - equity and adjusted EBITDA
of assets prior to acquisition. Adjusted EBITDA is a non-GAAP
supplemental financial measure that management and external users of
ETRN's consolidated financial statements, such as industry analysts,
investors, lenders and rating agencies, use to assess:

  • EQM's operating performance as compared to other publicly traded
    partnerships in the midstream energy industry without regard to
    historical cost basis or financing methods;
  • the ability of EQM's assets to generate sufficient cash flow to make
    distributions to EQM unitholders, including EQGP and ETRN;
  • EQM's ability to incur and service debt and fund capital expenditures;
  • the viability of acquisitions and other capital expenditure projects
    and the returns on investment of various investment opportunities.

ETRN believes that EQM adjusted EBITDA provides useful information to
investors in assessing ETRN's results of operations and financial
condition. EQM adjusted EBITDA should not be considered as an
alternative to EQM net income, operating income or any other measure of
financial performance presented in accordance with GAAP. EQM adjusted
EBITDA has important limitations as an analytical tool because it
excludes some, but not all, items that affect net income. Additionally,
because EQM adjusted EBITDA may be defined differently by other
companies in its industry, ETRN's definition of EQM adjusted EBITDA may
not be comparable to similarly titled measures of other companies,
thereby diminishing the utility of the measures.

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