Pennsylvania’s EQT Corp announced Monday its agreement to enter a midstream joint venture with $3.5 billion in funds managed by Blackstone Credit & Insurance.
Under the agreement BXCI would contribute the $3.5 billion of cash to assume a non-controlling interest in EQT ownership of three Appalachian midstream assets: Mountain Valley Pipeline LLC (Series A), the Hammerhead Pipeline and FERC-regulated transmission assets. The joint venture would have an implied total JV valuation of approximately $8.8 billion, which represents a 12x EBITDA.
Hammerhead Pipeline is a 64-mile natural gas connection between southwestern Pennsylvania and West Virginia. The Mountain Valley Project is a 303-mile natural gas connection that extends from West Virginia into southern Virginia. EQT says it is retaining rights to any additional growth of the projects, including a planned 75-mile expansion of the Mountain Valley Project known as MVP Southgate.
RBC Capital Markets acted as financial advisor to EQT and Citi advised Blackstone.
Milbank is advising Blackstone as legal counsel. Kirkland & Ellis is advising EQT.
The Kirkland team is led from New York and Houston by partner David Feirstein, Cyril Jones, along with Houston partners Lindsey Jaquillard, Jennifer Gasser and Brittany Ann Sakowitz; capital markets aspects were led from Houston by Matt Pacey and Lanchi Huynh with debt finance partner Rachael Lichman.
EQT plans to use proceeds from this transaction to pay down its term loan and revolving credit facility and redeem and tender for senior notes. In March, EQT acquired total ownership of midstream Equitrans for $5.5 billion in an all-stock transaction. The company expects to end 2024 with $9 billion of net debt.
Announcing the deal, EQT president and CEO Toby Z. Rice emphasized the fact that the assets included long-term contracts with some of the region’s leading utilities, and that it, “underscores the ultra-high-quality nature of EQT’s regulated midstream assets which service one of the strongest power demand growth regions in the United States.”