EQT, Equitrans Midstream announce 15-year gas gathering agreement

Pittsburgh-based natural gas producer EQT Corp. and Canonsburg, Pa.-based natural gas transmission company Equitrans Midstream Corp. announced several agreements Feb. 27 under which EQT will see reduced costs for transporting natural gas in exchange for approximately half of its equity stake in Equitrans, among other actions.

Under the 15-year gas gathering agreement that covers Pennsylvania and West Virginia, EQT will receive reduced gathering fees for two years and $52 million in cash from Equitrans.

The Minimum Volume Commitment (MVC) also increases to 3.0 billion cubic feet per day under the agreement. Incremental MVC increases begin when Equitrans’ Mountain Valley Pipeline (MVP) enters service. The pipeline project is working through the remaining legal and regulatory challenges. It continues to target a late 2020 full in-service date with an overall project cost estimate of $5.3 billion to $5.5 billion, according to Equitrans.

The companies also stated that MVC revenue for Equitrans under the new agreement is approximately $2.1 billion higher than under previous MVCs with EQT.

“Today is a transformational day for E-Train,” ETRN Chairman and CEO Thomas F. Karam said. “We are taking actions designed to rapidly and materially strengthen our balance sheet. We have executed a ‘blend, broaden, and extend’ contract with EQT, which will strengthen our partnership and position both companies for success over the long-term.”

Diana Charletta, ETRN president and chief operating officer, said the new agreement with EQT replaces more than a dozen separate gathering agreements and “serves to strengthen our ongoing partnership, a scenario that will be beneficial for both companies now and in the future. By simplifying our relationship, EQT can effectively execute their combo-development strategy, which in turn will lead to improved ETRN capital efficiency through better planning and optimized system designs. Equitrans’ world-class operations, coupled with our remarkably stable cash flows, simple structure, and transparent path forward, supports our ongoing commitment to deliver shareholder value.”