EQT in $8.8bn Appalachian midstream JV with Blackstone
US natural gas producer EQT said November 25 it had agreed to join with funds managed by Blackstone Credit & Insurance (BXCI) in a new joint venture consisting of midstream assets largely located in the Appalachian Basin.
Under terms of the agreements, BXCI will pay a cash consideration of $3.5bn for a non-controlling common equity interest in the joint venture, implying a total JV valuation of some $8.8bn.
The joint venture will consist of EQT’s ownership interest in the Mountain Valley Pipeline (MVP), certain federally regulated transmission and storage assets in Ohio, West Virginia Pennsylvania and the Hammerhead pipeline, a 1.6bn ft3/day gathering pipeline connecting natural gas production in Pennsylvania and West Virginia to MVP, Texas Eastern Transmission and Eastern Gas Transmission.
EQT will retain rights to growth projects associated with the JV assets, including a planned MVP expansion and the MVP Southgate project.
“This transaction underscores the ultra-high-quality nature of EQT’s regulated midstream assets, which service one of the strongest power demand growth regions in the US underpinned by long-term contracts with the region’s leading utilities,” EQT CEO Toby Rice said. “Importantly, through this joint venture EQT preserves the benefits of the Equitrans acquisition by retaining the long-term value from synergy capture and growth projects.”
EQT plans to use proceeds from this transaction to pay down debt associated with its $14bn acquisition earlier this year of Equitrans Midstream.
“These critical midstream assets benefit from strong tailwinds as demand for energy, particularly natural gas, continues to grow,” BXCI Managing Director Rick Campbell said. “Blackstone’s scale and expertise in this high conviction sector allowed us to create what we believe is a compelling opportunity for both EQT and our investors.”
The transaction is subject to customary closing adjustments, regulatory approvals and clearances and is expected to close in Q4 2024.