Equitrans Midstream Corporation (NYSE: ETRN) and EQM Midstream
Partners, LP (NYSE: EQM), today announced financial and operational
results for the full-year and fourth quarter 2019.
Additionally, in a separate news release, ETRN and EQM announced
several transformative actions, including a new 15-year gathering
agreement with EQT Corporation (EQT), the purchase of 25.3 million
ETRN shares from EQT, ETRN's proposed acquisition of EQM, and a new
dividend and capital allocation policy. For details, please see the
related news release and investor presentation, which are available
via the Investor page of the companies' respective websites at
www.equitransmidstream.com and www.eqm-midstreampartners.com.
Highlights:
- Generated 91% of transmission operating revenue from firm
reservation fees in 2019
- Generated 50% of gathering operating revenue from firm
reservation fees in 2019
- Achieved a record 8.5 Bcf per day gathered volume in the fourth
quarter
2019 YEAR-END AND FOURTH QUARTER RESULTS
ETRN announced net loss attributable to ETRN of $(203.7) million
for 2019 and $(268.7) million for the fourth quarter 2019. For the
quarter, ETRN received $136.0 million in cash from its ownership in
EQM; and directly incurred $1.9 million of selling, general and
administrative expenses.
For the year, net income attributable to EQM totaled $183.4
million; adjusted EBITDA was $1,338.4 million; net cash provided by
operating activities was $1,049.4 million; and distributable cash
flow was $961.4 million. For the fourth quarter 2019, net loss
attributable to EQM was $(210.5) million; adjusted EBITDA was
$343.7 million; net cash provided by operating activities was
$304.6 million; and distributable cash flow was $221.7 million. The
Non-GAAP Disclosures section of this news release provides
reconciliations of non-GAAP financial measures from their most
comparable GAAP financial measure.
Net loss attributable to ETRN and EQM for the fourth quarter
2019 was impacted by a $475.5 million impairment charge to
goodwill. ETRN also recognized $108.1 million of additional
goodwill impairment primarily related to EQM's Ohio gathering
assets acquired from EQT in 2018 (Ohio gathering assets). The
impairments were primarily driven by lower forecasted natural gas
production growth behind the Rice Midstream Partners LP (RMP)
gathering assets and Ohio gathering assets, which were acquired by
EQM in July 2018 and May 2018, respectively.
For the full-year 2019, net loss attributable to ETRN and net
income attributable to EQM were impacted by impairments of
long-lived assets of $854.3 million, primarily related to goodwill
and certain long-lived assets. For 2019, ETRN also recognized
$115.0 million of additional goodwill impairment primarily related
to the Ohio gathering assets. The impairments were primarily driven
by lower forecast natural gas production growth behind the RMP
gathering assets, the Eureka Midstream Holdings, LLC (Eureka) and
Hornet Midstream Holdings, LLC (Hornet) gathering assets, the Ohio
gathering assets, and certain non-core, FERC-regulated,
low-pressure gathering assets.
For the fourth quarter 2019, EQM operating revenue increased by
$41.1 million, or 10.7%, compared to the same quarter last year.
The increase in revenue was primarily related to the addition of
the Eureka and Hornet assets and higher contracted firm gathering
capacity and, was partially offset by lower water revenue.
Operating expenses increased by $222.8 million compared to the
fourth quarter 2018, with $213.6 million related to the impairment
charges and the remainder primarily from the addition of the Eureka
and Hornet assets.
EQM's full-year 2018 results have been retrospectively recast to
include the pre-acquisition results of RMP and the Ohio gathering
assets, which came under common control in 2017.
QUARTERLY DIVIDEND AND DISTRIBUTION
ETRN
For the fourth quarter 2019, ETRN paid a quarterly cash dividend
of $0.45 per share on February 21, 2020 to ETRN shareholders of
record at the close of business on February 11, 2020.
EQM
For the fourth quarter 2019, EQM paid a quarterly cash
distribution of $1.16 per common unit on February 13, 2020 to EQM
common unitholders of record at the close of business on February
4, 2020.
For the fourth quarter 2019, EQM paid a quarterly cash
distribution on the Series A Preferred Units of $1.0364 per Series
A Preferred Unit on February 13, 2020 to all Series A preferred
unitholders of record at the close of business on February 4,
2020.
EQM EXPANSION AND ONGOING MAINTENANCE CAPITAL
EXPENDITURES
Expansion
Expansion capital expenditures and capital contributions to
Mountain Valley Pipeline, LLC (MVP JV) were $388 million for the
fourth quarter 2019 and $1,615 million for the full year.
$MM
Three Months Ended December
31, 2019
Twelve Months Ended December
31, 2019
Mountain Valley Pipeline
$
252
$
755
Gathering(1)(2)
$
115
$
759
Transmission(3)
$
15
$
64
Water
$
6
$
37
Total
$
388
$
1,615
(1)
Does not reflect approximately $0.2
million and $59.1 million for the three and twelve months ended
December 31, 2019 related to non-operating assets acquired by EQM
from ETRN that primarily support EQM's gathering activities (Shared
Asset Transaction).
(2)
Includes 60% of Eureka expansion capital
expenditures.
(3)
Includes capital contributions to MVP JV
for the MVP Southgate project.
Ongoing Maintenance
Ongoing maintenance capital expenditures are cash expenditures
made to maintain, over the long-term, EQM operating capacity or
operating income. EQM ongoing maintenance capital expenditures net
of expected reimbursements and excluding the non-controlling
interest share of Eureka were $61.1 million for the full-year 2019
and $30.7 million for the fourth quarter.
OUTLOOK
EQM Capital Expenditures & Capital Contributions
EQM forecasts 2020 growth capital expenditures (CAPEX) and
capital contributions to MVP JV to be $1,200 - $1,300 million; and
ongoing maintenance CAPEX to be approximately $55 million,
excluding the non-controlling interest share of Eureka.
$MM
Full-Year 2020
Mountain Valley Pipeline
$650 - $700
Gathering(1)
$430 - $460
Transmission(2)
$100 - $120
Water
$20
Total
$1,200 - $1,300
(1)
Includes approximately $60 million from
EQM’s 60% interest in Eureka Midstream.
(2)
Includes capital contributions of
approximately $50 million to MVP JV for the MVP Southgate
project.
BUSINESS AND PROJECT UPDATES
Mountain Valley Pipeline
The MVP JV is working through the project’s remaining legal and
regulatory challenges and continues to target a late 2020 full
in-service date with an overall project cost estimate of $5.3
billion to $5.5 billion. EQM expects to fund approximately $2.7
billion of the total project cost and, through year-end 2019, has
funded approximately $2.0 billion.
MVP Southgate
On February 14, 2020, the Federal Energy Regulatory Commission
(FERC) issued the Final Environmental Impact Statement (FEIS) for
the MVP Southgate project. Project construction is scheduled to
begin this year, upon receiving all necessary permits and
authorizations, and MVP Southgate is targeted to enter service in
2021. The approximately 75-mile pipeline is expected to receive gas
from MVP in Virginia and transport the gas to new delivery points
in Rockingham and Alamance Counties, North Carolina. With a total
project cost estimate of $450 million to $500 million, MVP
Southgate is backed by a 300 MMcf per day firm capacity commitment
from Dominion Energy North Carolina and, as designed, the pipeline
has expansion capabilities up to 900 MMcf per day of total
capacity. EQM has a 47.2% ownership interest in MVP Southgate and
will operate the pipeline.
Hammerhead Pipeline
Hammerhead is a gathering header pipeline that will span
approximately 64 miles from southwestern Pennsylvania to Mobley,
West Virginia, where both MVP and the Ohio Valley Connector
originate. With a total estimated project cost of $555 million, the
pipeline is expected to provide 1.6 Bcf per day of capacity, of
which 1.2 Bcf per day is contracted under a 20-year firm capacity
commitment by EQT. EQM invested approximately $300 million in the
Hammerhead project during 2019 and expects to invest the remaining
approximately $50 million in 2020. The full in-service date for
Hammerhead will coincide with MVP's in-service date, which is
targeted for late 2020.
Equitrans Expansion Project
A portion of the Equitrans Expansion Project (EEP) commenced
operations with interruptible service in the third quarter 2019.
EEP provides approximately 600 MMcf capacity per day and offers
access to several markets through interconnects with Texas Eastern
Transmission, Dominion Transmission, and Columbia Gas Transmission.
EEP will also provide delivery into MVP and once MVP is placed
in-service, firm transportation agreements for 550 MMcf per day of
capacity will commence under 20-year terms.
Year-end and Fourth Quarter 2019 Earnings Conference Call
Information
ETRN and EQM will host a joint conference call with security
analysts today, February 27, 2020 at 10:30 a.m. (ET) to discuss
year-end and fourth quarter 2019 financial and operating results
and other business matters, including the new gathering agreement
with EQT, the ETRN share repurchase, and the related transactions
and announcements. A presentation webcast and audio live stream of
the call will be available on the Internet via the Investors page
at www.equitransmidstream.com and www.eqm-midstreampartners.com.
Security analysts may access the call: U.S. tollfree at (866)
393-4306; and internationally at (734) 385-2616. The ETRN/EQM joint
conference ID is 5280796.
Call Replay: For 14 days following the call, an audio
replay will be available at (855) 859-2056 or (404) 537-3406. The
ETRN/EQM conference ID: 5280796.
ETRN and EQM management speak to investors from time-to-time and
the presentation for these discussions, which is updated
periodically, is available via the companies' respective websites
at www.equitransmidstream.com and
www.eqm-midstreampartners.com.
Annual Report
ETRN and EQM expect to file Annual Reports on Form 10-K for the
fiscal year ended December 31, 2019 with the Securities and
Exchange Commission (SEC) on February 27, 2020.
The EQM report will be available on EQM's website at
www.eqm-midstreampartners.com and the ETRN report will be available
on ETRN's website at www.equitransmidstream.com. Both reports will
also be available on the SEC website at www.sec.gov.
EQM unitholders may request printed copies of the EQM report,
which contains audited financial statements. Email to:
investors@equitransmidstream.com; or submit a written request
to:
EQM Midstream Partners, LP Attention: Investor Relations 2200
Energy Drive Canonsburg, PA 15317
NON-GAAP DISCLOSURES
EQM Adjusted EBITDA and Distributable Cash Flow
As used in this news release, EQM adjusted EBITDA means net
(loss) income plus net interest expense, depreciation, amortization
of intangible assets, impairments of long-lived assets, payments on
EQM's preferred interest in EQT Energy Supply, LLC (Preferred
Interest), non-cash long-term compensation expense and separation
and other transaction costs, less equity income, AFUDC — equity,
and adjusted EBITDA attributable to noncontrolling interest. As
used in this news release, distributable cash flow means EQM
adjusted EBITDA less net interest expense excluding interest income
on the Preferred Interest, capitalized interest and AFUDC - debt,
ongoing maintenance capital expenditures net of expected
reimbursements, and cash distributions earned by Series A preferred
unitholders. The impact of noncontrolling interests is also
excluded from the calculation of adjustment items to distributable
cash flow. Distributable cash flow should not be viewed as
indicative of the actual amount of cash that EQM has available for
distributions or that EQM plans to distribute and is not intended
to be a liquidity measure. Adjusted EBITDA and distributable cash
flow are non-GAAP supplemental financial measures that management
and external users of ETRN's and EQM’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, in the case of adjusted EBITDA,
financing methods;
• the ability of EQM’s assets to generate sufficient cash flow
to make distributions to EQM unitholders;
• EQM’s ability to incur and service debt and fund capital
expenditures; and
• the viability of acquisitions and other capital expenditure
projects and the returns on investment of various investment
opportunities.
ETRN and EQM believe that adjusted EBITDA and distributable cash
flow provide useful information to investors in assessing ETRN's
and EQM’s financial condition and results of operations. Adjusted
EBITDA and distributable cash flow should not be considered as
alternatives to net income, operating income, net cash provided by
operating activities or any other measure of financial performance
or liquidity presented in accordance with GAAP. Adjusted EBITDA and
distributable cash flow have important limitations as analytical
tools because they exclude some, but not all, items that affect net
income, operating income and net cash provided by operating
activities. Additionally, because adjusted EBITDA and distributable
cash flow may be defined differently by other companies in ETRN's
and EQM's industry, ETRN's and EQM’s definitions of adjusted EBITDA
and distributable cash flow may not be comparable to similarly
titled measures of other companies, thereby diminishing the utility
of the measures. The table below reconciles adjusted EBITDA and
distributable cash flow from net income and net cash provided by
operating activities as derived from EQM's statements of
consolidated operations and cash flows to be included in EQM’s
Annual Report on Form 10-K for the year ended December 31,
2019.
ETRN and EQM are unable to provide a reconciliation of EQM's
projected adjusted EBITDA from projected net income, the most
comparable financial measure calculated in accordance with GAAP,
because EQM does not provide guidance with respect to the
intra-year timing of its or the MVP JV's capital spending, which
impact AFUDC – debt and – equity and equity earnings, among other
items, that are reconciling items between adjusted EBITDA and net
income. The timing of capital expenditures is volatile as it
depends on weather, regulatory approvals, contractor availability,
system performance and various other items. EQM provides ranges for
the full-year 2020 forecasts of net income attributable to EQM and
adjusted EBITDA to allow for the variability in the timing of cash
receipts and disbursements, capital spending and the impact on the
related reconciling items, many of which interplay with one
another. Therefore, the reconciliations of projected adjusted
EBITDA from projected net income are not available without
unreasonable effort.
Reconciliation of EQM Adjusted
EBITDA and Distributable Cash Flow
(Thousands, Except Coverage
Ratio)
Three Months Ended December
31, 2019
Twelve Months Ended December
31, 2019
Net (loss) income
$
(206,105
)
$
162,082
Add:
Net interest expense
56,988
209,984
Depreciation
60,383
223,160
Amortization of intangible assets
14,581
53,258
Impairments of long-lived assets
475,520
854,307
Preferred Interest payments
2,746
10,984
Non-cash long-term compensation
expense
—
255
Separation and other transaction costs
217
19,344
Less:
Equity income
(50,986
)
(163,279
)
AFUDC – equity
(234
)
(5,161
)
Adjusted EBITDA attributable to
noncontrolling interest (1)
(9,438
)
(26,503
)
Adjusted EBITDA
$
343,672
$
1,338,431
Less:
Net interest expense excluding interest
income on the Preferred Interest (2)
(57,333
)
(213,360
)
Capitalized interest and AFUDC – debt
(2)
(8,477
)
(28,631
)
Ongoing maintenance capital expenditures
net of expected reimbursements (2)(5)
(30,683
)
(61,108
)
Series A Preferred Unit distributions
(4)
(25,501
)
(73,981
)
Distributable cash flow
$
221,678
$
961,351
Distributions declared: (3)
Limited Partner
$
232,531
$
927,117
Coverage Ratio
0.95x
1.04x
Net cash provided by operating
activities
$
304,580
$
1,049,407
Adjustments:
Capitalized interest and AFUDC – debt
(2)
(8,477
)
(28,631
)
Principal payments received on the
Preferred Interest
1,190
4,661
Ongoing maintenance capital expenditures,
net of reimbursements (2)(5)
(30,683
)
(61,108
)
Adjusted EBITDA attributable to
noncontrolling interest (1)
(9,438
)
(26,503
)
Series A Preferred Unit distributions
(4)
(25,501
)
(73,981
)
Other, including changes in working
capital
(9,993
)
97,506
Distributable cash flow
$
221,678
$
961,351
(1)
Reflects adjusted EBITDA attributable to
noncontrolling interest associated with the third-party ownership
interest in Eureka.
Adjusted EBITDA attributable to
noncontrolling interest for the year ended December 31, 2019 was
calculated as net loss of $21.3 million, plus depreciation of $7.5
million, plus amortization of intangible assets of $3.4 million,
plus impairments of long-lived assets of $34.0 million and interest
expense of $2.9 million. Adjusted EBITDA attributable to
noncontrolling interest for the three months ended December 31,
2019 was calculated as net income of $4.3 million plus depreciation
of $2.7 million, plus amortization of intangible assets of $1.2
million and interest expense of $1.2 million.
(2)
Does not reflect amounts related to the
non-controlling interest share of Eureka.
(3)
Reflects cash distribution of $1.160 per
common unit for fourth quarter of 2019 and 200,457,630 common units
outstanding as of December 31, 2019.
(4)
Reflects cash distribution of $1.0364 per
Series A Preferred Unit.
(5)
Ongoing maintenance capital expenditures
net of expected reimbursements excludes ongoing maintenance that
EQM was reimbursed by ETRN in 2019, under the terms of the ETRN
Omnibus Agreement, of $0.7 million for the twelve months ended
December 31, 2019.
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, while also providing a rewarding workplace
and enriching the communities where its employees live and work.
ETRN owns the non-economic general partner interest and a majority
ownership of the limited partner interest in EQM.
Visit Equitrans Midstream Corporation at
www.equitransmidstream.com
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 one of the largest gatherers 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
also owns and/or operates approximately 1,900 miles of high- and
low-pressure gathering lines.
Visit EQM Midstream Partners, LP at
www.eqm-midstreampartners.com
Cautionary Statements
This news release contains certain forward-looking statements
within the meaning of Section 21E of the United States Securities
Exchange Act of 1934, as amended (the Exchange Act), and Section
27A of the United States Securities Act of 1933, as amended (the
Securities Act), concerning ETRN and EQM, the proposed transactions
and other matters. These statements may discuss goals, intentions
and expectations as to future plans, trends, events, results of
operations or financial condition, or otherwise, based on current
beliefs of the management of ETRN and EQM, as well as assumptions
made by, and information currently available to, such management.
Words such as “could,” “will,” “may,” “assume,” “forecast,”
“position,” “predict,” “strategy,” “expect,” “intend,” “plan,”
“estimate,” “anticipate,” “believe,” “project,” “budget,”
“potential,” or “continue,” and similar expressions are used to
identify forward-looking statements. Without limiting the
generality of the foregoing, forward-looking statements contained
in this communication specifically include the expectations of
plans, strategies, objectives and growth and anticipated financial
and operational performance of ETRN, EQM and their respective
affiliates, including whether the proposed transactions will be
completed, as expected or at all, and the timing of the closing of
the proposed transactions; and whether the conditions to the
proposed transactions can be satisfied. These statements are
subject to various risks and uncertainties, many of which are
outside the parties’ control. Factors that could cause actual
results to differ materially from those in the forward-looking
statements include guidance regarding EQM's gathering, transmission
and storage and water service revenue and volume growth, including
the anticipated effects associated with the new Gas Gathering and
Compression Agreement and related documents entered into with EQT
Corporation (EQT) as described herein (collectively, the EQT Global
GGA); projected revenue (including from firm reservation fees and
MVCs) and expenses, and the effect on projected revenue associated
with the EQT Global GGA; the ultimate gathering fee relief provided
to EQT under the EQT Global GGA and related agreements; ETRN’s and
EQM’s ability to de-lever; forecasted adjusted EBITDA, net income,
distributable cash flow, free cash flow, retained free cash flow,
leverage ratio, coverage ratio, and deferred revenue; the weighted
average contract life of gathering, transmission and storage
contracts; infrastructure programs (including the timing, cost,
capacity and sources of funding with respect to gathering,
transmission and storage and water expansion projects); the cost,
capacity, timing of regulatory approvals, final design and targeted
in-service dates of current projects; the ultimate terms, partners
and structure of Mountain Valley Pipeline, LLC (MVP JV) and
ownership interests therein; expansion projects in EQM's operating
areas and in areas that would provide access to new markets; EQM's
ability to provide produced water handling services and realize
expansion opportunities and related capital avoidance; ETRN’s and
EQM's ability to identify and complete acquisitions and other
strategic transactions, including joint ventures, and effectively
integrate transactions (including Eureka Midstream Holdings, LLC
and Hornet Midstream Holdings, LLC) into ETRN’s and EQM's
operations, and achieve synergies, system optionality and accretion
associated with transactions, including through increased scale;
EQM's ability to access commercial opportunities and new customers
for its water services business, and the final terms of any
definitive water services agreement between EQT and EQM related to
the letter agreement between the parties in respect of water
services (Water Services Letter Agreement); any further credit
rating impacts associated with MVP, customer credit ratings
changes, including EQT's, and defaults, acquisitions and financings
and any further changes in ETRN’s or EQM’s respective credit
ratings; the timing and amount of future issuances or repurchases
of securities; effects of conversion of EQM securities in
connection with ETRN’s proposed acquisition of EQM or otherwise;
effects of seasonality; expected cash flows and MVCs, including
those associated with the EQT Global GGA and any definitive
agreement between EQT and EQM related to the Water Services Letter
Agreement; capital commitments; projected capital contributions and
capital and operating expenditures, including the amount and timing
of reimbursable capital expenditures, capital budget and sources of
funds for capital expenditures; dividend and distribution amounts
and timing and rates, including the effect thereon of completion of
the MVP project and expected changes announced by ETRN and EQM on
February 27, 2020 in connection with ETRN’s proposed acquisition of
EQM; the effect and outcome of pending and future litigation and
regulatory proceedings; changes in commodity prices and the effect
of commodity prices on EQM's business; liquidity and financing
requirements, including sources and availability; interest rates;
ETRN’s, EQM’s and EQM’s subsidiaries’ respective abilities to
service debt under, and comply with the covenants contained in,
their respective credit agreements; expectations regarding
production volumes in EQM's areas of operations; ETRN’s and EQM’s
abilities to achieve the anticipated benefits associated with the
execution of the EQT Global GGA and the Water Services Letter
Agreement; the effects of government regulation; and tax status and
position. 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. ETRN
and EQM have based these forward-looking statements on current
expectations and assumptions about future events. While ETRN and
EQM consider 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 and/or EQM’s
control. The risks and uncertainties that may affect the
operations, performance and results of ETRN’s and EQM’s business
and forward-looking statements include, but are not limited to,
those set forth under (i) Item 1A, "Risk Factors" in ETRN's Annual
Report on Form 10-K for the year ended December 31, 2018 filed with
the Securities and Exchange Commission (the SEC), as may have been
updated by Part II, Item 1A, "Risk Factors," of ETRN’s subsequent
Quarterly Reports on Form 10-Q filed with the SEC, as well as Item
1A, "Risk Factors" in ETRN's Annual Report on Form 10-K for the
year ended December 31, 2019 to be filed with the SEC, and (ii)
Item 1A, "Risk Factors" in EQM's Annual Report on Form 10-K for the
year ended December 31, 2018 filed with the SEC, as may have been
updated by Part II, Item 1A, "Risk Factors," of EQM’s subsequent
Quarterly Reports on Form 10-Q filed with the SEC, as well as Item
1A, "Risk Factors" in EQM’s Annual Report on Form 10-K for the year
ended December 31, 2019 to be filed with the SEC. Any
forward-looking statement speaks only as of the date on which such
statement is made, and neither ETRN nor EQM intends to correct or
update any forward-looking statement, unless required by securities
laws, whether as a result of new information, future events or
otherwise.
All forward-looking statements speak only as of the date they
are made and are based on information available at that time. ETRN
and EQM assume no obligation to update forward-looking statements
to reflect circumstances or events that occur after the date the
forward-looking statements were made or to reflect the occurrence
of unanticipated events except as required by federal securities
laws. As forward-looking statements involve significant risks and
uncertainties, caution should be exercised against placing undue
reliance on such statements.
No Offer or Solicitation
This communication is not intended to and does not constitute an
offer to sell or the solicitation of an offer to subscribe for or
buy or an invitation to purchase or subscribe for any securities or
the solicitation of any vote in any jurisdiction pursuant to the
proposed transactions or otherwise, nor shall there be any sale,
issuance or transfer of securities in any jurisdiction in
contravention of applicable law. No offer of securities shall be
made except by means of a prospectus meeting the requirements of
Section 10 of the Securities Act. Subject to certain exceptions to
be approved by the relevant regulators or certain facts to be
ascertained, the public offer will not be made directly or
indirectly, in or into any jurisdiction where to do so would
constitute a violation of the laws of such jurisdiction, or by use
of the mails or by any means or instrumentality (including without
limitation, facsimile transmission, telephone and the internet) of
interstate or foreign commerce, or any facility of a national
securities exchange, of any such jurisdiction.
Additional Information and Where to Find It
In connection with their proposed transactions, ETRN and EQM
intend to file a registration statement on Form S-4, containing a
joint proxy statement/prospectus (the Form S-4) with the SEC. This
communication is not a substitute for the registration statement,
definitive proxy statement/prospectus or any other documents that
ETRN or EQM may file with the SEC or send to the shareholders of
ETRN or the unitholders of EQM in connection with the proposed
transactions. SHAREHOLDERS OF ETRN AND UNITHOLDERS OF EQM ARE URGED
TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE
FORM S-4 AND THE DEFINITIVE PROXY STATEMENT/PROSPECTUS INCLUDED
THEREIN IF AND WHEN FILED, AND ANY OTHER RELEVANT DOCUMENTS FILED
WITH THE SEC, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE PROPOSED TRANSACTIONS. When available, investors and security
holders will be able to obtain copies of these documents, including
the proxy statement/prospectus, and any other documents that may be
filed with the SEC with respect to the proposed transactions free
of charge at the SEC’s website, http://www.sec.gov or as described
in the following paragraph.
The documents filed with the SEC by ETRN may be obtained free of
charge at its website (www.equitransmidstream.com) or by requesting
them by mail at Equitrans Midstream Corporation, 2200 Energy Drive,
Canonsburg, PA 15317, Attention: Corporate Secretary, or by
telephone at (724) 271-7600. The documents filed with the SEC by
EQM may be obtained free of charge at its website
(www.eqm-midstreampartners.com) or by requesting them by mail at
EQM Midstream Partners, LP, 2200 Energy Drive, Canonsburg, PA
15317, Attention: Corporate Secretary, or by telephone at (724)
271-7600.
Participants in the Solicitation
ETRN, EQM, EQM’s general partner and their respective directors
and executive officers may be deemed to be participants in the
solicitation of proxies in connection with the proposed
transactions. Information regarding the directors and executive
officers of ETRN is contained in ETRN’s Form 10-K for the year
ended December 31, 2018 and definitive proxy statement filed with
the SEC on April 26, 2019. Information regarding the directors and
executive officers of EQM’s general partner is contained in EQM’s
Form 10-K for the year ended December 31, 2018. Additional
information regarding the interests of participants in the
solicitation of proxies in connection with the proposed
transactions will be included in the proxy
statement/prospectus.
This release serves as qualified notice to nominees under
Treasury Regulation Sections 1.1446-4(b)(4) and (d). Please note
that 100% of EQM’s distributions to foreign investors are
attributable to income that is effectively connected with a United
States trade or business. Accordingly, all of EQM’s distributions
to foreign investors are subject to federal income tax withholding
at the highest effective tax rate for individuals or corporations,
as applicable. Nominees, and not EQM, are treated as the
withholding agents responsible for withholding on the distributions
received by them on behalf of foreign investors.
EQUITRANS MIDSTREAM
CORPORATION
STATEMENTS OF CONSOLIDATED
COMPREHENSIVE INCOME
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
(Thousands, except per share
amounts)
Operating revenues (1)
$
425,859
$
384,791
$
1,630,242
$
1,495,098
Operating expenses:
Operating and maintenance
47,907
44,917
165,367
163,451
Selling, general and administrative
29,362
40,957
112,915
123,810
Separation and other transaction costs
1,474
37,449
26,080
85,444
Depreciation
60,634
48,586
227,364
175,821
Amortization of intangible assets
14,581
10,387
53,258
41,547
Impairments of long-lived assets
583,664
261,941
969,258
261,941
Total operating expenses
737,622
444,237
1,554,242
852,014
Operating (loss) income
(311,763
)
(59,446
)
76,000
643,084
Equity income
50,986
25,942
163,279
61,778
Other income
24
1,818
2,661
5,011
Net interest expense
67,927
46,606
256,195
115,454
(Loss) Income before income taxes
(328,680
)
(78,292
)
(14,255
)
594,419
Income tax expense
4,836
39,748
50,704
83,142
Net (loss) income
(333,516
)
(118,040
)
(64,959
)
511,277
Net (loss) income attributable to
noncontrolling interests
(64,778
)
(69,817
)
138,784
292,879
Net (loss) income attributable to ETRN
$
(268,738
)
$
(48,223
)
$
(203,743
)
$
218,398
Earnings per share of common stock
attributable to ETRN:
Basic:
Weighted average common stock
outstanding
254,940
254,432
254,884
254,432
Net (loss) income
$
(1.05
)
$
(0.19
)
$
(0.80
)
$
0.86
Diluted:
Weighted average common stock
outstanding
254,940
254,432
254,884
255,033
Net (loss) income
$
(1.05
)
$
(0.19
)
$
(0.80
)
$
0.86
(1)
Operating revenues included related party
revenues from EQT Corporation of $278.7 million and $283.5 million
for the three months ended December 31, 2019 and 2018, and $1,122.6
million and $1,111.3 million for the twelve months ended December
31, 2019 and 2018.
EQM MIDSTREAM PARTNERS, LP AND
SUBSIDIARIES
STATEMENTS OF CONSOLIDATED
OPERATIONS (1)
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
(Thousands, except per unit
amounts)
Operating revenues (2)
$
425,859
$
384,791
$
1,630,242
$
1,495,098
Operating expenses:
Operating and maintenance
47,907
44,676
165,367
163,451
Selling, general and administrative
27,449
41,093
110,620
121,831
Separation and other transaction costs
217
250
19,344
7,761
Depreciation
60,383
44,957
223,160
171,914
Amortization of intangibles assets
14,581
10,387
53,258
41,547
Impairments of long-lived assets
475,520
261,941
854,307
261,941
Total operating expenses
626,057
403,304
1,426,056
768,445
Operating (loss) income
(200,198
)
(18,513
)
204,186
726,653
Equity income
50,986
25,942
163,279
61,778
Other income
95
1,818
4,601
5,011
Net interest expense
56,988
45,354
209,984
122,094
Net (loss) income
(206,105
)
(36,107
)
162,082
671,348
Net income (loss) attributable to
noncontrolling interest
4,373
—
(21,291
)
3,346
Net (loss) income attributable to EQM
$
(210,478
)
$
(36,107
)
$
183,373
$
668,002
Calculation of limited partner common unit
interest in net (loss) income:
Net (loss) income attributable to EQM
$
(210,478
)
$
(36,107
)
$
183,373
$
668,002
Less: Series A Preferred Units interest in
net income
(25,501
)
—
(73,981
)
—
Less: Pre-acquisition net income allocated
to EQT
—
—
—
(164,242
)
Less: General partner interest in net
income - general partner units
—
1,041
—
(6,104
)
Less: General partner interest in net
income - IDRs
—
(72,674
)
—
(255,927
)
Limited partner interest in net (loss)
income
$
(235,979
)
$
(107,740
)
$
109,392
$
241,729
Net (loss) income per limited partner
common unit – basic
$
(1.18
)
$
(0.89
)
$
0.58
$
2.43
Net (loss) income per limited partner
common unit – diluted
$
(1.18
)
$
(0.89
)
$
0.56
$
2.43
Weighted average limited partner common
units outstanding – basic
200,484
120,475
189,085
99,303
Weighted average limited partner common
units outstanding – diluted
200,484
120,475
196,085
99,303
(1)
EQM's consolidated financial statements
for the twelve months ended December 31, 2018 have been
retrospectively recast to include the pre-acquisition results of
RMP.
(2)
Operating revenues included related party
revenues from EQT Corporation of $278.7 million and $283.5 million
for the three months ended December 31, 2019 and 2018, and $1,122.6
million and $1,111.3 million for the twelve months ended December
31, 2019 and 2018.
EQM MIDSTREAM PARTNERS, LP AND
SUBSIDIARIES
GATHERING RESULTS OF
OPERATIONS (1)
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
FINANCIAL DATA
(Thousands, except per day
amounts)
Firm reservation fee revenues (2)
$
149,598
$
113,127
$
581,118
$
447,360
Volumetric-based fee revenues
163,295
152,503
578,813
549,710
Total operating revenues
312,893
265,630
1,159,931
997,070
Operating expenses:
Operating and maintenance
28,880
24,943
96,740
79,735
Selling, general and administrative
20,457
29,088
80,822
84,001
Separation and other transaction costs
217
250
19,344
7,761
Depreciation
39,808
26,369
144,310
98,678
Amortization of intangible assets
14,581
10,387
53,258
41,547
Impairments of long-lived assets
475,520
261,941
854,307
261,941
Total operating expenses
579,463
352,978
1,248,781
573,663
Operating (loss) income
$
(266,570
)
$
(87,348
)
$
(88,850
)
$
423,407
OPERATIONAL DATA
Gathering volumes (BBtu per day):
Firm capacity reservation (2)
3,438
2,088
3,351
2,044
Volumetric-based services
5,016
4,900
4,493
4,445
Total gathered volumes
8,454
6,988
7,844
6,489
Capital expenditures (3)(4)
$
148,751
$
202,179
$
893,804
$
717,251
(1)
EQM's consolidated financial statements
for the twelve months ended December 31, 2018 have been
retrospectively recast to include the pre-acquisition results of
RMP.
(2)
Includes revenues and volumes, as
applicable, from contracts with MVCs.
(3)
Capital expenditures for the three and
twelve months ended December 31, 2019 include expenditures made to
ETRN for the Shared Asset Transaction of approximately $0.2 million
and $59.1 million, respectively.
(4)
Includes approximately $8.3 million and
$25.9 million of capital expenditures related to noncontrolling
interests in Eureka for the three and twelve months ended December
31, 2019.
EQM MIDSTREAM PARTNERS, LP AND
SUBSIDIARIES
TRANSMISSION RESULTS OF
OPERATIONS
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
FINANCIAL DATA
(Thousands, except per day
amounts)
Firm reservation fee revenues
$
93,518
$
94,059
$
356,569
$
356,725
Volumetric-based fee revenues
7,076
7,313
33,951
30,076
Total operating revenues
100,594
101,372
390,520
386,801
Operating expenses:
Operating and maintenance
10,847
12,481
33,989
39,563
Selling, general and administrative
6,239
9,601
26,865
31,936
Depreciation
13,461
12,495
51,935
49,723
Total operating expenses
30,547
34,577
112,789
121,222
Operating income
$
70,047
$
66,795
$
277,731
$
265,579
Equity income
$
50,986
$
25,942
$
163,279
$
61,778
OPERATIONAL DATA
Transmission pipeline throughput (BBtu per
day)
Firm capacity reservation
2,901
3,040
2,823
2,903
Volumetric-based services
17
47
90
59
Total transmission pipeline throughput
2,918
3,087
2,913
2,962
Average contracted firm transmission
reservation commitments (BBtu per day)
4,125
4,230
3,966
3,909
Capital expenditures (1)
$
13,026
$
29,933
$
59,313
$
114,450
(1)
Transmission capital expenditures do not
include capital contributions made to the MVP Joint Venture for the
MVP and MVP Southgate projects of approximately $261.7 million and
$467.2 million for the three months ended December 31, 2019 and
2018, and twelve months ended December 31, 2019 and 2018 of $774.6
million and $913.2 million, respectively.
EQM MIDSTREAM PARTNERS, LP AND
SUBSIDIARIES
WATER RESULTS OF OPERATIONS
(1)
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
FINANCIAL DATA
(Thousands)
Water services revenues
$
12,372
$
17,789
$
79,791
$
111,227
Operating expenses:
Operating and maintenance
8,180
7,251
34,638
44,152
Selling, general and administrative
753
2,405
2,933
5,895
Depreciation
7,114
6,093
26,915
23,513
Total operating expenses
16,047
15,749
64,486
73,560
Operating (loss) income
$
(3,675
)
$
2,040
$
15,305
$
37,667
OPERATIONAL DATA
Water services volumes (MMgal)
296
348
1,808
2,088
Capital expenditures
$
5,967
$
6,179
$
37,457
$
23,537
(1)
EQM's consolidated financial statements
for the twelve months ended December 31, 2018 have been
retrospectively recast to include the pre-acquisition results of
RMP.
EQM MIDSTREAM PARTNERS, LP AND
SUBSIDIARIES
CAPITAL EXPENDITURE SUMMARY
(1)
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
(Thousands)
Expansion capital expenditures (2)(3)
$
134,981
$
215,564
$
925,387
$
803,347
Maintenance capital expenditures
32,763
22,727
65,187
51,891
Total capital expenditures (4)
$
167,744
$
238,291
$
990,574
$
855,238
(1)
EQM's consolidated financial statements
for the twelve months ended December 31, 2018 have been
retrospectively recast to include the pre-acquisition results of
RMP.
(2)
Expansion capital expenditures for the
three months ended December 31, 2019 and 2018 do not include
capital contributions made to the MVP JV of $261.7 million and
$467.2 million and for the twelve months ended December 31, 2019
and 2018 of $774.6 million and $913.2 million, respectively.
(3)
Expansion capital expenditures for the
three and twelve months ended December 31, 2019 include
expenditures made to ETRN for the Shared Asset Transaction of
approximately $0.2 million and $59.1 million, respectively.
(4)
Includes approximately $8.3 million and
$25.9 million of capital expenditures related to noncontrolling
interests in Eureka for the three and twelve months ended December
31, 2019.
Source: Equitrans Midstream Corporation
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200227005248/en/
Analyst inquiries: Nate Tetlow – Vice President,
Corporate Development and Investor Relations 412-553-5834
ntetlow@equitransmidstream.com
Media inquiries: Natalie Cox – Director, Communications
and Corporate Affairs 412-395-3941 ncox@equitransmidstream.com
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