Provide 2019 Guidance; Business and Project
Updates
Equitrans Midstream Corporation (NYSE:ETRN) and EQM Midstream
Partners, LP (NYSE:EQM) today announced full-year and fourth
quarter 2018 results.
2018 Highlights:
- Launched Equitrans Midstream
Corporation as a leading, independent midstream company
- Generated 92% of transmission operating
revenue from firm reservation fees
- Generated 45% of gathering operating
revenue from firm reservation fees
- Averaged a record 7.0 Bcf per day
gathered volume in the fourth quarter
- Reduced gathering operating and
maintenance expense per gathered volume by 29% year-over-year
- Completed 70% of construction for the
Mountain Valley Pipeline
Recent Activities:
- Executed agreement to eliminate the EQM
incentive distribution rights
- ETRN acquired EQGP Holdings, LP;
delisted EQGP from the NYSE
- EQM declared a $1.13 per unit cash
distribution for Q4 2018
- ETRN declared initial dividend of $0.41
per share for Q4 2018
- ETRN expects $1.80 dividend per share
in 2019
“During 2018, we successfully completed our business separation
and launched ETRN as a strong, independent midstream company," said
Thomas F. Karam, chief executive officer of ETRN and EQM.
"Additionally, today we announced the elimination of the EQM IDRs,
demonstrating our previous commitment to simplify our structure,
strengthen EQM's financial profile, and create long-term value for
our shareholders and unitholders. Building on the momentum of the
past year, we look forward to continuing to execute on our growth
strategy."
Diana Charletta, chief operating officer, added, "In 2018, EQM
more than doubled its asset base through the acquisitions of Rice
Midstream Partners, and the Strike Force and Olympus gathering
systems; and we completed several significant organic growth
projects -- collectively culminating in a transformational year for
our company. By the end of 2019, we anticipate the in-service of
several key projects, including MVP, Hammerhead, and the Equitrans
expansion project; and we also expect to begin integrating our
Pennsylvania gathering systems for our largest customer. We remain
focused on leveraging our asset footprint and providing innovative
commercial solutions, which we believe will ultimately reflect
tremendous benefits for our customers."
2018 YEAR-END AND FOURTH QUARTER RESULTS
ETRN today announced net income attributable to ETRN of $218
million for 2018 and net loss attributable to ETRN of $48 million
for the fourth quarter 2018.
For the year, net income attributable to EQM totaled $668
million, adjusted EBITDA was $998 million, net cash provided by
operating activities was $1,187 million, and distributable cash
flow was $809 million. For the fourth quarter 2018, EQM reported a
net loss attributable to EQM of $36 million, adjusted EBITDA was
$302 million, net cash provided by operating activities was $322
million, and distributable cash flow was $228 million. The Non-GAAP
Disclosures section of this news release provides reconciliations
of non-GAAP financial measures to their most comparable GAAP
financial measure.
ETRN and EQM net income for the fourth quarter and full-year
were impacted by a $262 million impairment charge to goodwill. The
impairment was primarily driven by production curtailments behind
the Rice Energy midstream assets, which were acquired by EQT
Corporation (EQT) in 2017 and subsequently purchased by EQM in
2018.
On July 23, 2018, EQM closed the acquisition of Rice Midstream
Partners LP (RMP). Effective May 1, 2018, EQM acquired the Olympus
gathering system and a 75% interest in the Strike Force gathering
system (Drop-Down Transaction) from EQT. Also, on May 1, 2018, EQM
purchased the remaining 25% interest in the Strike Force gathering
system from Gulfport Energy. As a result of the RMP acquisition and
the Drop-Down Transaction, EQM's financial statements have been
retrospectively recast to include the pre-acquisition results of
each acquisition from the time common control began on November 13,
2017, the date on which EQT closed its acquisition of Rice
Energy.
For the fourth quarter, ETRN received $117 million cash from its
ownership in EQM, which consists of 37.2 million limited partner
units, the general partner interest, and 100% of the incentive
distribution rights.
During the fourth quarter, ETRN incurred $37 million of expenses
related to the separation from EQT and other transaction costs.
ETRN also incurred $2 million of selling, general and
administrative (SG&A) expenses related to public company
costs.
EQM fourth quarter 2018 operating revenue increased $92 million,
a 32% increase compared to the same quarter last year. The RMP
acquisition and the Drop-Down Transaction accounted for $86 million
of the increase, with the remaining increase resulting from higher
contracted firm transmission and gathering capacities. Operating
expenses, excluding the impairment charge, increased $37 million
compared to the fourth quarter of 2017, with approximately $23
million resulting from the RMP acquisition and the Drop-Down
Transaction. EQM also had approximately $5 million of non-recurring
SG&A costs. The remaining increase was primarily related to
higher system throughput and additional assets placed in-service,
consistent with the growth in the business.
SIMPLIFICATION TRANSACTION
As announced in a separate news release today, ETRN, EQM, and
certain of their affiliates entered into a definitive agreement to
exchange and cancel the EQM Incentive Distribution Rights (IDRs)
and restructure the economic general partner interest in EQM for 80
million newly issued EQM common units, 7 million newly issued EQM
Class B units, and a non-economic general partner interest. The EQM
Class B units are not entitled to receive cash distributions from
EQM until they become convertible into EQM common units. At the
holder's option, the Class B units will be convertible into EQM
common units in three tranches: 2.5 million units convertible on
April 1, 2021; 2.5 million units convertible on April 1, 2022; and
2 million units convertible on April 1, 2023. The transaction is
expected to close in February 2019. At closing, ETRN will
beneficially own the non-economic general partner interest and an
approximate 60% limited partner interest in EQM. For more details,
please refer to the separate news release issued today.
QUARTERLY DIVIDEND AND DISTRIBUTION
ETRN
For the fourth quarter 2018, ETRN will pay a quarterly cash
dividend of $0.41 per share on February 27, 2019 to ETRN
shareholders of record at the close of business on February 15,
2019.
EQM
For the fourth quarter 2018, EQM paid a quarterly cash
distribution of $1.13 per unit on February 13, 2019 to EQM
unitholders of record at the close of business on February 1, 2019.
The quarterly cash distribution was 1% higher than the third
quarter 2018 and 10% higher than the fourth quarter 2017.
EQM EXPANSION AND ONGOING MAINTENANCE CAPITAL
EXPENDITURES
Expansion
Expansion capital expenditures and capital contributions to
Mountain Valley Pipeline, LLC (MVP JV), totaled $682 million for
the fourth quarter 2018 and $1,716 million for the full-year
2018.
$MM
Three Months EndedDecember 31,
2018
Twelve Months EndedDecember 31,
2018
Mountain Valley Pipeline $467 $913 Gathering $183 $684 Transmission
$26 $96 Water $6 $23 Total $682 $1,716
Includes full-year Drop-Down Transaction
and RMP expansion capital expenditures. Approximately $52 million
of expansion capital expenditures were spent on the Drop-Down
Transaction assets prior to the Drop-Down Transaction.
Approximately $85 million of expansion capital expenditures were
spent on the RMP assets prior to the RMP acquisition.
Ongoing Maintenance
Ongoing maintenance capital expenditures are cash expenditures
made to maintain, over the long term, EQM operating capacity or
operating income. EQM ongoing maintenance capital expenditures, net
of reimbursements, totaled $23 million in the fourth quarter 2018
and $47 million for the full-year.
GUIDANCE
ETRN Guidance
In 2019, ETRN expects to pay a quarterly dividend of $0.45 per
share, resulting in an annual dividend of $1.80 per share. ETRN
expects to increase the quarterly per share dividend once a year
during each first quarter.
ETRN forecasts approximately $5 million in public company costs
annually and expects approximately $5 million of transaction costs
in the first quarter 2019.
ETRN Long-term Outlook
- Annual dividend growth target of
8%
EQM Financial Guidance
Full-year 2019 Net Income ($B) $0.95
Adjusted EBITDA ($B) $1.3 Annual Distribution Growth 6% Coverage
Ratio 1.0x - 1.1x
Q1 2019
Net Income ($MM) $215 - $235 Adjusted EBITDA ($MM) $310 - $330
As a result of the separation from EQT, EQM will incur certain
SG&A expenses related to the establishment of independent
functions and systems that were previously used to support both
EQM's midstream business and EQT's production business. In
2019, EQM forecasts ongoing quarterly SG&A expenses of $30 -
$35 million and an incremental $5 - $10 million of separation and
other transaction costs in the first quarter.
EQM Expansion Capital Expenditures
& Capital Contributions
$B
2019 Growth
CAPEXForecast
Mountain Valley Pipeline $0.9 Gathering $0.9 Transmission $0.1
Water $0.1 Total $2.0
For full-year 2019, EQM forecasts ongoing maintenance capital
expenditures of approximately $60 million.
EQM Long-term Outlook
- Annual distribution growth target of
6%
- Distribution coverage target in excess
of 1.2x beginning in 2020
- Debt to EBITDA target of 3.5x - 4.0x
beginning in 2020
- Current project backlog expected to be
funded with retained cash flow and debt capacity
BUSINESS AND PROJECT UPDATES
Transmission - New Power Plant Connection
EQM recently executed a Precedent Agreement with ESC Brooke
County Power I, LLC to construct a natural gas pipeline for
connection to a proposed 830 MW power plant in Brooke County, West
Virginia. The agreement includes a 10-year firm reservation
commitment for 140 MMcf per day of capacity. EQM expects to invest
an estimated $80 million to construct the approximately 16-mile
long pipeline, which has a targeted in-service date during mid-year
2022.
Water Services
EQM continues to develop its water services business by
expanding its Pennsylvania and Ohio freshwater assets, which
include water pipelines, impoundment facilities, pumping stations,
and take point and measurement facilities. EQM’s water services
team recently finalized agreements with EQT and four additional
producers to provide fresh water services. The water services
business segment is expected to generate approximately $100 million
of EBITDA in 2019, a 64% increase over 2018.
Mountain Valley Pipeline
As of year-end 2018, the Mountain Valley Pipeline (MVP) project
team completed 70% of its construction activities, which included
the welding of nearly 175 miles of pipeline and the ongoing
construction work of all compressor stations and interconnects. The
MVP JV is continuing with its scaled-back construction efforts for
the winter and continues to target a full in-service date during
the fourth quarter 2019 at an overall project cost estimate of $4.6
billion, of which EQM will fund approximately $2.2 billion. The MVP
team also continues to work through the project’s remaining legal
challenges, which include securing a Nationwide 12 Permit from the
U.S. Army Corps of Engineers for stream and waterbody
crossings.
MVP Southgate
EQM recently increased its equity interest in the MVP Southgate
project by acquiring a portion of the interests previously owned by
Con Edison and PSNC Energy. As a result of these transactions, EQM
now has a 47.2% ownership interest in the project.
On November 6, 2018, MVP Southgate filed its certificate
application with the Federal Energy Regulatory Commission (FERC).
The approximately 70-mile project is expected to receive gas from
the MVP in Virginia and transport to new delivery points in
Rockingham and Alamance Counties, North Carolina. MVP Southgate is
backed by a 300 MMcf per day firm capacity commitment from PSNC
Energy. As designed, the pipeline has expansion capabilities that
could provide up to 900 MMcf per day of total capacity. The project
cost estimate is $450 - $500 million. Subject to FERC approval, MVP
Southgate has a targeted in-service date during the fourth quarter
2020. EQM will serve as operator of the pipeline.
Hammerhead Pipeline
The Hammerhead project is a gathering header pipeline that will
traverse approximately 64 miles from southwestern Pennsylvania to
Mobley, West Virginia, where both the MVP and the Ohio Valley
Connector originate. The pipeline is expected to provide 1.6 Bcf
per day of capacity, of which 1.2 Bcf per day is contracted under a
firm capacity commitment by EQT. The pipeline is estimated to cost
$555 million and is expected to be placed in-service during the
fourth quarter 2019, in conjunction with the MVP.
Equitrans Midstream Corporation Launched
On November 13, 2018, ETRN began "regular way" trading on the
New York Stock Exchange after completion of the spin-off
from EQT. ETRN is now a standalone, publicly traded company
and, through its subsidiaries, is one of the largest natural gas
gatherers and transmission pipeline operators in the United
States, with a premier asset footprint in the Marcellus
and Utica Shale region.
Acquisition of EQGP Holdings, LP by ETRN
On December 31, 2018, ETRN closed several private purchases of
common units (EQGP Common Units) in EQGP Holdings, LP (EQGP) for
$20.00 per unit in cash (Private Purchases). As a result of the
Private Purchases, ETRN owned more than 95% of the outstanding EQGP
Common Units, allowing ETRN to exercise the Limited Call Right
under EQGP's partnership agreement. The Limited Call Right closed
on January 10, 2019, at which time the remaining holders of EQGP
Common Units (other than ETRN and its affiliates) received $20.00
per unit in cash. As a result of these transactions, EQGP Common
Units are no longer publicly traded.
ETRN financed the Private Purchases and the Limited Call Right
with cash proceeds from the issuance of a $600 million, five-year,
senior secured Term Loan B.
NON-GAAP DISCLOSURES
EQM Adjusted EBITDA and Distributable Cash Flow
As used in this news release, EQM adjusted EBITDA means net
(loss) income attributable to EQM plus net interest expense,
depreciation, amortization of intangible assets, impairment of
goodwill, payments on EQM's preferred interest in EQT Energy
Supply, LLC (Preferred Interest), non-cash long-term compensation
expense and transaction costs less equity income, AFUDC - equity
and adjusted EBITDA of assets prior to acquisition. As used in this
news release, distributable cash flow means EQM adjusted EBITDA
less net interest expense excluding interest income on the
Preferred Interest, capitalized interest and AFUDC - debt, and
ongoing maintenance capital expenditures net of reimbursements and
transaction costs. Distributable cash flow should not be viewed as
indicative of the actual amount of cash that EQM has available for
distributions from operating surplus or that EQM plans to
distribute. Adjusted EBITDA and distributable cash flow are
non-GAAP supplemental financial measures that management and
external users of EQM’s consolidated financial statements, such as
industry analysts, investors, lenders and rating agencies, use to
assess:
- EQM’s operating performance as compared
to other publicly traded partnerships in the midstream energy
industry without regard to historical cost basis or, in the case of
adjusted EBITDA, financing methods;
- the ability of EQM’s assets to generate
sufficient cash flow to make distributions to EQM unitholders;
- EQM’s ability to incur and service debt
and fund capital expenditures; and
- the viability of acquisitions and other
capital expenditure projects and the returns on investment of
various investment opportunities.
EQM believes that adjusted EBITDA and distributable cash flow
provide useful information to investors in assessing EQM’s results
of operations and financial condition. Adjusted EBITDA and
distributable cash flow should not be considered as alternatives to
net (loss) income, operating income, net cash provided by operating
activities or any other measure of financial performance or
liquidity presented in accordance with GAAP. Adjusted EBITDA and
distributable cash flow have important limitations as analytical
tools because they exclude some, but not all, items that affect net
(loss) income and net cash provided by operating activities.
Additionally, because adjusted EBITDA and distributable cash flow
may be defined differently by other companies in its industry,
EQM’s definitions of adjusted EBITDA and distributable cash flow
may not be comparable to similarly titled measures of other
companies, thereby diminishing the utility of the measures. The
table below reconciles adjusted EBITDA and distributable cash flow
with net (loss) income and net cash provided by operating
activities as derived from the statements of consolidated
operations and cash flows to be included in EQM’s annual report on
Form 10-K for the year ended December 31, 2018.
EQM is unable to provide a reconciliation of its projected
adjusted EBITDA (defined as projected earnings before interest,
taxes, depreciation and amortization) to projected net income, the
most comparable financial measure calculated in accordance with
GAAP, because EQM does not provide guidance with respect to the
intra-year timing of its or the MVP JV's capital spending, which
impact AFUDC - debt and equity and equity earnings, among other
items, that are reconciling items between adjusted EBITDA and net
income. The timing of the capital expenditures is volatile as it
depends on weather, regulatory approvals, contractor availability,
system performance and various other items. EQM provides a range
for the forecasts of net income and adjusted EBITDA to allow for
the variability in the timing of capital spending and the impact on
the related reconciling items, many of which interplay with each
other. Therefore, the reconciliation of projected adjusted EBITDA
to projected net income is not available without unreasonable
effort.
Reconciliation of EQM Adjusted EBITDA
and Distributable Cash Flow
(Thousands)
Three Months EndedDecember 31,
2018
Twelve Months EndedDecember 31,
2018
Net (loss) income attributable to EQM $
(36,107 ) $ 668,002 Add: Net interest expense 45,354 122,094
Depreciation 44,957 171,914 Amortization of intangible assets
10,387 41,547 Impairment of goodwill 261,941 261,941 Preferred
Interest payments 2,746 10,984 Non-cash long-term compensation
expense — 1,275 Transaction costs 250 7,761 Less: Equity income
(25,942 ) (61,778 ) AFUDC – equity (1,985 ) (5,570 ) Adjusted
EBITDA attributable to RMP prior to merger — (160,128 ) Adjusted
EBITDA attributable to the Drop-Down Transaction — (60,507 )
Adjusted EBITDA $ 301,601 $ 997,535 Less: Net
interest expense excluding interest income on the Preferred
Interest (46,441 ) (124,198 ) Capitalized interest and AFUDC – debt
(3,914 ) (9,873 ) Ongoing maintenance capital expenditures net of
reimbursements (22,778 ) (46,939 ) Transaction costs (250 ) (7,761
)
Distributable cash flow $ 228,218 $ 808,764
Distributions declared (1): Limited
Partner $ 136,117 $ 487,553
General Partner 75,176
265,604
Total $ 211,293 $ 753,157
Coverage
Ratio 1.08x 1.07x
Net cash provided by operating
activities $ 321,757 $ 1,187,239 Adjustments: Capitalized
interest and AFUDC – debt (3,914 ) (9,873 ) Principal payments
received on the Preferred Interest 1,125 4,406 Ongoing maintenance
capital expenditures net of reimbursements (22,778 ) (46,939 )
Adjusted EBITDA attributable to RMP prior to merger — (160,128 )
Adjusted EBITDA attributable to the Drop-Down Transaction — (60,507
) Other, including changes in working capital (67,972 ) (105,434 )
Distributable cash flow $ 228,218 $ 808,764
(1) Reflects cash distribution of $1.130 per limited partner
unit for the fourth quarter of 2018 and 120,457,638 limited partner
units outstanding as of December 31, 2018.
EQM Water EBITDA
Projected EQM water EBITDA means the projected earnings before
interest, taxes, depreciation and amortization of EQM’s water
services business. Projected EQM water EBITDA is a non-GAAP
supplemental financial measure that management and external users
of EQM’s consolidated financial statements, such as industry
analysts, investors, lenders and rating agencies, use to assess the
anticipated impact of EQM’s water services business on EQM’s
operating performance and EQM’s ability to incur and service debt
and fund capital expenditures. EQM water EBITDA should not be
considered as an alternative to EQM’s net income, operating income
or any other measure of financial performance presented in
accordance with GAAP. EQM water EBITDA has important limitations as
an analytical tool because the measure excludes some, but not all,
items that affect net income. Additionally, because EQM water
EBITDA may be defined differently by other companies in EQM’s
industry, the definition of EQM water EBITDA may not be comparable
to similarly titled measures of other companies, thereby
diminishing the utility of the measure. EQM has not provided a
reconciliation of projected EQM water EBITDA to projected EQM net
income, the most comparable measure calculated in accordance with
GAAP. EQM does not allocate certain costs, such as interest
expenses, to individual assets within its business segments.
Therefore, the reconciliation of projected EQM water EBITDA to
projected EQM net income is not available without unreasonable
effort.
Q4 2018 and Full-year 2018 Conference Call
Information
ETRN and EQM will host a joint conference call with security
analysts today at 11:00 a.m. (ET) to discuss fourth quarter and
full-year 2018 financial results, operating results, and other
business matters. An audio live stream of the call will be
available on the internet via the Investors page at www.equitransmidstream.com and www.eqm-midstreampartners.com. Security analysts
may access the call: U.S. tollfree at (866) 393-4306; and
internationally at (734) 385-2655. The ETRN/EQM joint conference ID
is 7984534.
Call Replay: For 14 days following the call, an audio
replay will be available at (855) 859-2056 or (404) 537-3406. The
ETRN/EQM conference ID: 7984534.
ETRN and EQM management speak to investors from time to time and
the analyst presentation for these discussions, which is updated
periodically, is available via the companies' respective websites
at www.equitransmidstream.com and
www.eqm-midstreampartners.com.
Annual Report
ETRN and EQM expect to file Annual Reports on Form 10-K for the
fiscal year ended December 31, 2018 with the Securities and
Exchange Commission (SEC) on February 14, 2019.
The EQM report will be available on EQM’s website
at www.eqm-midstreampartners.com and the ETRN report will
be available on ETRN's website at www.equitransmidstream.com. Both
reports will also be available on the SEC website
at www.sec.gov.
EQM unitholders may request printed copies of the EQM report,
which contains audited financial statements. Email
to: investors@equitransmidstream.com; or submit a written
request to:
EQM Midstream Partners, LP
Attention: Investor Relations
625 Liberty Avenue, Suite 2000
Pittsburgh, PA 15222
About Equitrans Midstream Corporation:
Equitrans Midstream Corporation (ETRN) has a premier asset
footprint in the Appalachian Basin and is one of the largest
natural gas gatherers in the United States. With a rich 135-year
history in the energy industry, ETRN was launched as a standalone
company in 2018 and, through its subsidiaries, has an operational
focus on gas gathering systems, transmission and storage systems,
and water services assets that support natural gas producers across
the Basin. ETRN is helping to meet America’s growing need for
clean-burning energy, while also providing a rewarding workplace
and enriching the communities where its employees live and work.
ETRN owns the general partner interest, the incentive distribution
rights, and a 30.6% limited partner interest in EQM.
Visit Equitrans Midstream Corporation at
www.equitransmidstream.com
About EQM Midstream Partners:
EQM Midstream Partners, LP is a growth-oriented limited
partnership formed to own, operate, acquire, and develop midstream
assets in the Appalachian Basin. As one of the largest gatherers of
natural gas in the United States, EQM provides midstream services
to producers, utilities, and other customers through its
strategically located natural gas transmission, storage, and
gathering systems, and water services to support energy development
and production in the Marcellus and Utica regions. EQM owns
approximately 950 miles of FERC-regulated interstate pipelines and
approximately 2,200 miles of high- and low-pressure gathering
lines.
Visit EQM Midstream Partners, LP at
www.eqm-midstreampartners.com
Cautionary Statements
Disclosures in this news release contain certain forward-looking
statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended, and Section 27A of the Securities
Act of 1933, as amended. Statements that do not relate strictly to
historical or current facts are forward-looking. Without limiting
the generality of the foregoing, forward-looking statements
contained in this news release specifically include the
expectations of plans, strategies, objectives and growth and
anticipated financial and operational performance of ETRN and its
subsidiaries, including guidance regarding EQM’s gathering,
transmission and storage and water services revenue and volume
growth; projected revenue and expenses; infrastructure programs
(including the timing, cost, capacity and sources of funding with
respect to gathering, transmission and storage, and water
projects); the cost, capacity, timing of regulatory approvals and
anticipated in-service dates of the MVP mainline, MVP Southgate,
Hammerhead and other projects; the ultimate terms, partners and
structure of the MVP JV, and EQM’s ownership interests in the MVP
JV; EQM’s ability to provide produced water handling services;
acquisitions and other strategic transactions, including joint
ventures, and ETRN’s and EQM’s ability to complete any
transactions, effectively integrate acquisitions and achieve
anticipated synergies and accretion associated with any
transactions; the effects of the change of control of EQM resulting
from the separation of ETRN from EQT; internal rate of return
(IRR); compound annual growth rate (CAGR); capital commitments,
projected capital contributions and capital and operating
expenditures, including the amount and timing of capital
expenditures reimbursable by EQT, capital budget and sources of
funds for capital expenditures; liquidity and financing
requirements, including funding sources and availability; ETRN’s
and EQM’s abilities to service debt under, and comply with the
covenants contained in, their respective credit agreements;
dividend and distribution amounts, timing, rates and growth; the
timing of the closing of the simplification transaction to exchange
and cancel the IDRs and restructure the EQM general partner
interests; ETRN's ultimate ownership percentage in EQM following
the closing of the simplification transaction; effects of the
conversion, if at all, of the EQM Class B units; effect of
commodity prices; projected net income, projected adjusted EBITDA,
projected EBITDA, projected distributable cash flow, projected
leverage and projected coverage ratio; projected SG&A and
separation and other transaction costs; the timing and amount of
future issuances of ETRN common stock or EQM common units; changes
in ETRN’s or EQM’s credit ratings; the effects of government
regulation, tariffs and litigation; and tax position. These
forward-looking statements involve risks and uncertainties that
could cause actual results to differ materially from projected
results. Accordingly, investors should not place undue reliance on
forward-looking statements as a prediction of actual results. ETRN
and EQM have based these forward-looking statements on current
expectations and assumptions about future events. While ETRN and
EQM consider these expectations and assumptions to be reasonable,
they are inherently subject to significant business, economic,
competitive, regulatory and other risks and uncertainties, many of
which are difficult to predict and beyond the ETRN’s and/or EQM’s
control. The risks and uncertainties that may affect the
operations, performance and results of ETRN’s and EQM’s business
and forward-looking statements include, but are not limited to,
those set forth under (i) Item 1A, “Risk Factors” of ETRN’s Form 10
registration statement filed with the Securities and Exchange
Commission (SEC) and Item 1A, “Risk Factors” of ETRN’s Form 10-K
for the year ended December 31, 2018 to be filed with the SEC, and
(ii) Item 1A, “Risk Factors” of EQM’s Form 10-K for the year ended
December 31, 2017 as filed with the SEC and Item 1A, “Risk Factors”
of EQM’s Form 10-K for the year ended December 31, 2018 to be
filed with the SEC, in each case as may be updated by any
subsequent Form 10-Qs. Any forward-looking statement speaks only as
of the date on which such statement is made, and neither ETRN nor
EQM intends to correct or update any forward-looking statement,
whether as a result of new information, future events or
otherwise.
Information in this news release regarding EQT and its
subsidiaries, is derived from publicly available information
published by EQT.
This release serves as qualified notice to nominees under
Treasury Regulation Sections 1.1446-4(b)(4) and (d). Please note
that 100% of EQM’s distributions to foreign investors are
attributable to income that is effectively connected with a United
States trade or business. Accordingly, all of EQM’s distributions
to foreign investors are subject to federal income tax withholding
at the highest effective tax rate for individuals or corporations,
as applicable. Nominees, and not EQM, are treated as the
withholding agents responsible for withholding on the distributions
received by them on behalf of foreign investors.
EQUITRANS MIDSTREAM CORPORATION
STATEMENTS OF CONSOLIDATED
OPERATIONS
Three Months EndedDecember
31,
Twelve Months EndedDecember
31,
2018 2017 2018
2017 (Thousands, except per share amounts) Operating
revenues (1) $ 384,791 $ 292,378 $ 1,495,098 $ 895,558 Operating
expenses: Operating and maintenance 44,658 30,110 163,192 84,831
Selling, general and administrative 41,216 26,023 124,069 80,339
Separation and other transaction costs 37,449 79,728 85,444 85,124
Depreciation 48,586 32,483 175,821 96,674 Amortization of
intangible assets 10,387 5,540 41,547 5,540 Impairment of goodwill
261,941 — 261,941 — Total operating
expenses 444,237 173,884 852,014 352,508 Operating (loss) income
(59,446 ) 118,494 643,084 543,050 Equity income 25,942 6,758 61,778
22,171 Other income 1,818 863 5,011 4,439 Net interest expense
46,606 9,931 115,454 34,801 (Loss)
Income before income taxes (78,292 ) 116,184 594,419 534,859 Income
tax expense 39,748 144,045 83,142 212,402
Net (loss) income (118,040 ) (27,861 ) 511,277 322,457 Less:
Net (loss) income attributable to noncontrolling interests (69,817
) 99,264 292,879 349,613 Net (loss) income
attributable to Equitrans Midstream Corporation $ (48,223 ) $
(127,125 ) $ 218,398 $ (27,156 ) Net (loss) income
per common stock outstanding - basic $ (0.19 ) $ (0.50 ) $ 0.86 $
(0.11 ) Net (loss) income per common stock outstanding - diluted $
(0.19 ) $ (0.50 ) $ 0.86 $ (0.11 ) Weighted average common
stock outstanding - basic 254,432 254,432 254,432 254,432 Weighted
average common stock outstanding - diluted (2) 254,432 254,432
255,033 254,432 (1)
Operating revenues included related party
revenues from EQT for the three months ended December 31, 2018 and
December 31, 2017 of approximately $283.5 million and $220.1
million, respectively, and for the years ended December 31, 2018
and December 31, 2017 of approximately $1.1 billion and $665.9
million, respectively.
(2)
For the three and twelve months ended
December 31, 2017, earnings per share shown in the statements of
consolidated operations was calculated based on the shares of
Equitrans Midstream common stock distributed in connection with the
Separation and Distribution and is considered pro forma in nature.
Prior to the Separation, the Company did not have any publicly
issued or outstanding common stock (other than shares owned by
EQT).
EQM MIDSTREAM PARTNERS, LP AND
SUBSIDIARIES
STATEMENTS OF CONSOLIDATED
OPERATIONS (1)
Three Months EndedDecember
31,
Twelve Months EndedDecember
31,
2018 2017 2018
2017 (Thousands, except per unit amounts) Operating
revenues (2) $ 384,791 $ 292,378 $ 1,495,098 $ 895,558 Operating
expenses: Operating and maintenance 44,658 30,110 163,192 84,831
Selling, general and administrative 41,361 25,351 129,851 77,321
Depreciation 44,957 42,970 171,914 107,161 Amortization of
intangibles assets 10,387 5,540 41,547 5,540 Impairment of goodwill
261,941 — 261,941 — Total operating
expenses 403,304 103,971 768,445 274,853
Operating (loss) income (18,513 ) 188,407 726,653 620,705
Equity income 25,942 6,758 61,778 22,171 Other income 1,818 863
5,011 4,439 Net interest expense 45,354 10,941
122,094 36,955 Net (loss) income (36,107 ) 185,087
671,348 610,360 Net income attributable to noncontrolling interest
— 734 3,346 734 Net (loss) income
attributable to EQM $ (36,107 ) $ 184,353 $ 668,002 $
609,626 Calculation of limited partners' interest in
net (loss) income: Net (loss) income attributable to EQM $ (36,107
) $ 184,353 $ 668,002 $ 609,626 Less pre-acquisition net income
allocated to parent — (37,722 ) (164,242 ) (37,722 ) Less general
partner interest in net income – general partner units 1,041 (2,578
) (6,104 ) (10,060 ) Less general partner interest in net income –
incentive distribution rights (72,674 ) (41,080 ) (255,927 )
(143,531 ) Limited partners' interest in net (loss) income $
(107,740 ) $ 102,973 $ 241,729 $ 418,313
Net (loss) income per limited partner unit – basic $ (0.89 )
$ 1.28 $ 2.43 $ 5.19 Net (loss) income per limited partner unit –
diluted $ (0.89 ) $ 1.28 $ 2.43 $ 5.19 Weighted average
limited partner units outstanding – basic 120,475 80,603 99,303
80,603 Weighted average limited partner units outstanding – diluted
120,475 80,603 99,303 80,603 (1)
EQM’s consolidated financial statements
have been retrospectively recast to include the pre-acquisition
results of EQM Olympus Midstream LLC, Strike Force Midstream
Holdings LLC and EQM West Virginia Midstream LLC, which were
acquired by EQM effective on May 1, 2018 (the Drop-Down
Transaction), and Rice Midstream Partners LP, which was merged with
and into EQM effective on July 23, 2018 (the EQM-RMP Merger).
(2)
Operating revenues included related party
revenues from EQT for the three months ended December 31, 2018 and
December 31, 2017 of approximately $283.5 million and $220.1
million, respectively, and for the years ended December 31, 2018
and December 31, 2017 of approximately $1.1 billion and $665.9
million, respectively.
EQM MIDSTREAM PARTNERS, LP AND
SUBSIDIARIES
GATHERING RESULTS OF OPERATIONS
(1)
Three Months EndedDecember
31,
Twelve Months EndedDecember
31,
2018 2017 2018
2017 FINANCIAL DATA (Thousands, except per day
amounts) Firm reservation fee revenues $ 113,127 $ 106,454 $
447,360 $ 407,355 Volumetric-based fee revenues 152,503
72,517 549,710 102,612 Total operating revenues
265,630 178,971 997,070 509,967 Operating expenses: Operating and
maintenance 24,926 14,588 79,477 45,325 Selling, general and
administrative 29,355 16,252 92,020 45,052 Depreciation 26,369
16,559 98,678 44,957 Amortization of intangible assets 10,387 5,540
41,547 5,540 Impairment of goodwill 261,941 — 261,941
— Total operating expenses 352,978 52,939
573,663 140,874 Operating (loss) income $ (87,348 ) $
126,032 $ 423,407 $ 369,093
OPERATIONAL
DATA Gathering volumes (BBtu per day) Firm capacity reservation
2,088 1,956 2,044 1,826 Volumetric-based services 4,900
2,336 4,445 816 Total gathered volumes 6,988 4,292
6,489 2,642 Capital expenditures $ 202,179 $ 103,794 $
717,251 $ 254,522 (1)
EQM’s consolidated financial statements
have been retrospectively recast to include the pre-acquisition
results of the Drop-Down Transaction and the EQM-RMP Merger.
EQM MIDSTREAM PARTNERS, LP AND
SUBSIDIARIES
TRANSMISSION RESULTS OF
OPERATIONS
Three Months EndedDecember
31,
Twelve Months EndedDecember
31,
2018 2017 2018 2017
FINANCIAL DATA (Thousands, except per day amounts)
Firm reservation fee revenues $ 94,059 $ 91,969 $ 356,725 $ 348,193
Volumetric-based fee revenues 7,313 7,833 30,076
23,793 Total operating revenues 101,372 99,802 386,801
371,986 Operating expenses: Operating and maintenance 12,481 9,924
39,563 33,908 Selling, general and administrative 9,601 8,752
31,936 31,922 Depreciation 12,495 22,896 49,723
58,689 Total operating expenses 34,577 41,572
121,222 124,519 Operating income $ 66,795 $ 58,230
$ 265,579 $ 247,467 Equity Income $ 25,942 $
6,758 $ 61,778 $ 22,171
OPERATIONAL DATA Transmission
pipeline throughput (BBtu per day) Firm capacity reservation 3,040
2,472 2,903 2,399 Volumetric-based services 47 65 59
37 Total transmission pipeline throughput 3,087 2,537 2,962
2,436 Average contracted firm transmission reservation
commitments (BBtu per day) 4,230 3,952 3,909 3,627 Capital
expenditures $ 29,933 $ 37,423 $ 114,450 $ 111,102
EQM MIDSTREAM PARTNERS, LP AND
SUBSIDIARIES
WATER RESULTS OF OPERATIONS
(1)
Three Months EndedDecember
31,
Twelve Months EndedDecember
31,
2018 2017 2018 2017
FINANCIAL DATA (Thousands) Water services revenues $
17,789 $ 13,605 $ 111,227 $ 13,605 Operating expenses: Operating
and maintenance 7,251 5,598 44,152 5,598 Selling, general and
administrative 2,405 347 5,895 347 Depreciation 6,093 3,515
23,513 3,515 Total operating expenses 15,749
9,460 73,560 9,460 Operating income $ 2,040 $
4,145 $ 37,667 4,145
OPERATIONAL DATA
Water services volumes (MMgal) 348 226 2,088 226 Capital
expenditures $ 6,179 $ 6,233 $ 23,537 $ 6,233 (1)
EQM’s consolidated financial statements
have been retrospectively recast to include the pre-acquisition
results of the EQM-RMP Merger.
EQM MIDSTREAM PARTNERS, LP AND
SUBSIDIARIES
CAPITAL EXPENDITURE SUMMARY
Three Months EndedDecember
31,
Twelve Months EndedDecember
31,
2018 2017 2018 2017
(Thousands) Expansion capital expenditures (1) $ 215,564 $
120,981 $ 803,347 $ 328,529 Maintenance capital expenditures 22,727
26,469 51,891 43,328 Total capital
expenditures $ 238,291 $ 147,450 $ 855,238 $
371,857 (1)
Expansion capital expenditures do not
include capital contributions made to the MVP JV. Capital
contributions to the MVP JV were $467.2 million and $56.1 million
for the three months ended December 31, 2018 and 2017,
respectively, and $913.2 million and $159.6 million for the years
ended December 31, 2018 and 2017, respectively.
Source: Equitrans Midstream Corporation
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190214005260/en/
Analyst inquiries:Nate Tetlow – Vice President, Corporate
Development and Investor Relations
Director412-553-5834ntetlow@equitransmidstream.com
Media inquiries:Natalie Cox – Director, Corporate
Communications412-395-3941ncox@equitransmidstream.com
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