EQT Releases Plans to Spin-off Appalachian Basin Midstream Business
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US natural gas producer EQT has revealed its plans to spin off its midstream business into an independent public traded company by the end of the third quarter of this year.
EQT said that the tax-free separation of its upstream and midstream businesses will create two independently energy companies focused on the Appalachian basin.
As per the separation plan, EQT shareholders will keep their shares of EQT stock and receive a pro-rata share of the new independent midstream company.
According to EQT, the creation of a new midstream entity would help in attracting a long-term investor base suited to each business while creating the third largest natural gas gathering company in the US.
EQT also said that the separation of its businesses will result in increased potential for expanding customer base and organic growth of the two new pure-play companies. It will also help in simplifying financial results and in efficient allocation of funds.
The two companies will remain to be based in Pittsburgh, Pennsylvania.
EQT Lead Independent Director James Rohr said: “The decision to build our midstream business in parallel with upstream growth has created one of the strongest midstream companies in the Appalachian Basin.
“We have taken many steps to highlight the value of our midstream assets through a series of transactions including, the initial public offering of EQM, midstream asset dropdowns to EQM, and the initial public offering of EQGP. This transaction represents a new chapter for our business as we unlock the value created during the past 10 years.”
EQT’s decision to separate its upstream and midstream businesses follows its $6.7bn acquisition of Rice Energy in November 2017, which was done to consolidate its position as a major natural gas producer in the Appalachian Basin.
EQT President and CEO Steve Schlotterbeck said: “When we announced the Rice Energy acquisition, we committed to addressing the sum-of-the-parts discount in our shares.
“The Rice transaction accelerated the maturation of both our businesses, provided scale that significantly enhanced the standalone prospects of both companies, and positioned us to further enhance value through separation.”
EQT said that it will also merge Rice Midstream Partners with EQT Midstream Partners and sell the RMP Incentive Distribution Rights (IDRs) to EQT GP.
Source: Energy Business Review
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