EQT, a US-based natural gas producer, has announced a midstream JV with Blackstone Credit & Insurance (BXCI), a unit of investment major Blackstone.
The JV includes EQT's interests in key infrastructure assets such as the Mountain Valley Pipeline (MVP), transmission and storage facilities, as well as the Hammerhead Pipeline.
Under the terms of the agreement, BXCI will provide $3.5bn in cash for a non-controlling equity stake, valuing the JV at $8.8bn.
It is expected to offer EQT a “large-scale” equity capital solution with an accretive cost of capital.
EQT will maintain rights to growth projects related to the assets, including the MVP expansion and the MVP Southgate project.
The natural gas company plans to use the proceeds from this transaction to reduce its term loan and revolving credit facility and to redeem and tender for senior notes.
Following this transaction and the divestiture of non-operated assets in north-east Pennsylvania, EQT expects to exit 2024 with approximately $9bn in net debt.
The transaction, pending customary closing adjustments and necessary regulatory approvals and clearances, is set to close in the fourth quarter of 2024.
EQT president and CEO Toby Rice said: “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 United States underpinned by long-term contracts with the region’s leading utilities.
“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.”
BXCI managing director Rick Campbell said: “These critical midstream assets benefit from strong tailwinds as demand for energy, particularly natural gas, continues to grow.
“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.”
In July this year, EQT completed the acquisition of Equitrans Midstream, creating a vertically integrated natural gas business.
The merger, initially announced in March 2024, valued the combined entity at $35bn.
The combined company boasts 27.6 trillion cubic feet equivalent of proved reserves and a daily net production of 6.3 billion cubic feet equivalent, supported by more than 3,200km of pipeline infrastructure.
