EQT to sell gas pipeline system to EQT Midstream subsidiary for $1.18 billion
EQT Corp. will get $1.18 billion to focus on gas drilling in the Appalachian Basin and newly acquired oil-and-gas-rich areas in Texas by selling a pipeline system to its subsidiary.
The Downtown-based gas company announced after markets closed on Wednesday that EQT Midstream Partners, which the company spun off two years ago, would buy the Jupiter gathering system, 35 miles of pipes that collect gas from Marcellus shale wells in Greene and Washington counties.
The company, which also authorized a repurchase of 1 million common shares, has not decided how to allocate the money from the sale. Earlier in the day, CEO David Porges told board members and shareholders that investing in Marcellus operations was the company's “primary driver.”
After the annual shareholder meeting, he told reporters that investors expect such “drop-down” sales of non-Marcellus assets to fund gas exploration and production.
“We'll probably do one drop-down a year,” he said.
EQT Midstream said it would raise money by offering 8.75 million units of limited partner interests. It did not advertise a price. Before the announcement, EQT Midstream stock closed up $1.39 at $77.03.
EQT also announced a swap with fellow Marcellus company Range Resources for gas operations outside the area. Fort Worth-based Range gets EQT's land and gathering system in the Nora Field of Virginia, where both companies gather gas from coal bed methane. EQT gets 73,000 acres and 900 working wells in the Permian Basin of West Texas.
“We see tremendous upside not only in the exploration and development of clean burning natural gas in Virginia, but also in the growing demand both here and in surrounding markets,” Range Vice President Jerry Grantham said about the Nora operations.
Range expects each side to hire the other company's workers in the exchanged operations.
Range had half the land in the area and expects to sell gas to power generators in Virginia.
Porges said EQT wanted out of Virginia but could not sell the operations for cash as it focuses on Marcellus, the Huron shale in Kentucky and potentially the Utica shale in Pennsylvania.
Last week, Porges announced during a quarterly earnings report that EQT would stop drilling in the Utica in Ohio because it was not getting good gas from those wells in Guernsey County. But, he said, EQT would watch how companies such as Range did with Utica wells closer to home.
“We would like to not have to pay the full tuition on the classes we get” from watching Range, he said.
The earnings report showed EQT posted $192.2 million in net income during the first three months of the year, a 92 percent increase from the year before that Porges said was fueled by Marcellus production. EQT stock closed up 57 cents at $108.99, a 23 percent increase from the beginning of the year.
David Conti is a staff writer for Trib Total Media. He can be reached at 412-388-5802 or email@example.com.