Equitrans Midstream Corporation (NYSE: ETRN) and EQM Midstream
Partners, LP (NYSE: EQM) today announced first quarter 2019
results.
Q1 2019 Highlights:
- Delivered first quarter operating and
financial results ahead of guidance
- Generated 90% of transmission operating
revenue from firm reservation fees
- Generated 49% of gathering operating
revenue from firm reservation fees
- Completed strategic acquisition of 60%
of Eureka Midstream and 100% of Hornet Midstream in April 2019
- Simplified structure and eliminated the
EQM incentive distribution rights (IDRs)
“We had a solid start to the year as we moved quickly to
simplify our structure, executed a strategic bolt-on acquisition,
and delivered first quarter results ahead of guidance," said Thomas
F. Karam, chief executive officer of ETRN and EQM. "While we
continue execution of our growth strategy, we will maintain our
financial prudence by leveraging our asset footprint to enhance
operating efficiencies and to deliver innovative natural gas
transportation and water services solutions to our customers."
Diana Charletta, chief operating officer, added, "With our many
first quarter accomplishments, 2019 is proving to be another
exciting and transformational year for our company. Our E-Train
team stepped up to lead the due diligence and integration efforts
for the recent acquisition and continued to operate our existing
assets safely and efficiently. During the quarter, we managed
modest variations in our gathered volume by focusing on cost
controls. Additionally, we continued to concentrate on the
completion of our major growth projects, which will provide our
customers with increased flexibility and access to premium
markets."
FIRST QUARTER 2019 RESULTS
ETRN announced net income attributable to ETRN of $56.3 million
for the first quarter 2019, and ETRN will receive $134 million in
cash from its ownership in EQM. Also during the quarter, ETRN
directly incurred $5 million of expenses related to separation and
other transaction costs.
For the first quarter 2019, net income attributable to EQM was
$251.9 million, adjusted EBITDA was $331.8 million, net cash
provided by operating activities was $161.0 million, and
distributable cash flow was $266.8 million. The Non-GAAP
Disclosures section of this earnings news release provides
reconciliations of non-GAAP financial measures from their most
comparable GAAP financial measure.
For the first quarter 2019, EQM operating revenue increased by
$19 million, or 5%, compared to the same quarter last year. The
increase in revenue was related primarily to higher contracted firm
transmission and gathering capacities and was partly offset by
lower water services revenue. Operating expenses increased by $17
million compared to the first quarter 2018, with $4 million of the
increase related to separation and other transaction costs and the
remaining increase related primarily to higher system throughput
and additional assets placed in service, consistent with the growth
in the business.
EQM's first quarter 2018 results have been retrospectively
recast to include the pre-acquisition results of Rice Midstream
Partners, LP (RMP) and the Olympus gathering system and 75% of the
Strike Force gathering system (Drop-Down Entities), each of which
came under common control in 2017.
QUARTERLY DIVIDEND AND DISTRIBUTION
ETRN
For the first quarter 2019, ETRN will pay a quarterly cash
dividend of $0.45 per share on May 23, 2019 to ETRN shareholders of
record at the close of business on May 14, 2019.
EQM
For the first quarter 2019, EQM will pay a quarterly cash
distribution of $1.145 per common unit on May 14, 2019 to EQM
common unitholders of record at the close of business on May 3,
2019.
EQM EXPANSION AND ONGOING MAINTENANCE CAPITAL
EXPENDITURES
Expansion
Expansion capital expenditures and capital contributions to
Mountain Valley Pipeline, LLC (MVP JV) were $322 million for the
first quarter 2019.
$MM
Three Months Ended March 31,
2019
2019 Full-year Forecast(2) Mountain Valley Pipeline
$145 $900 Gathering(1) $152 $950 Transmission $16 $100 Water $9
$100 Total $322 $2,050
(1) Does not reflect approximately $49.7 million related to
non-operating assets acquired by EQM from ETRN that primarily
support EQM's gathering activities (Shared Asset Transaction).
(2) Forecast includes 60% of Eureka Midstream Holdings, LLC’s
(Eureka Midstream) expansion capital expenditures and 100% of
Hornet Midstream Holdings, LLC’s (Hornet Midstream) expansion
capital expenditures.
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 expected reimbursements were $9 million for the first quarter
2019. EQM forecasts full-year 2019 ongoing maintenance capital
expenditures of $65 million.
OUTLOOK
The ETRN and EQM financial forecast provided below reflects the
acquisition of 60% of Eureka Midstream and 100% of Hornet
Midstream, which closed on April 10, 2019. Financial results of the
Eureka Midstream joint venture will be consolidated in EQM and ETRN
financial statements for accounting purposes.
ETRN
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 annually
during the first quarter of every year. ETRN reiterates an annual
dividend growth target of 8%.
EQM
$B
2019 2020 2021
Net Income attributable to EQM $1.0 $1.2 $1.4 Adjusted EBITDA $1.4
$1.8 $2.0 Expansion Capex + MVP capital contributions $2.05 $0.8
$0.6
- Annual distribution per unit growth
target of 6%
- Distribution coverage target of 1.0x to
1.1x in 2019 and greater than 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
Due to the seasonal nature of some transmission and storage
services, primarily from utility customer contracts, second quarter
2019 transmission revenue from these contracts and services are
expected to be lower than first quarter by approximately $25
million.
$MM
Q2 2019 Net Income attributable to EQM $200 -
$220 Adjusted EBITDA $305 - $325
BUSINESS AND PROJECT UPDATES
Water Services
In the first quarter 2019, EQM generated approximately $8
million of water EBITDA and forecasts $100 – $115 million of water
EBITDA for the full-year 2019. During the quarter, EQM delivered
369 million gallons of fresh water, and forecasts approximately 2.7
– 3.3 billion gallons of fresh water delivery for full-year 2019.
Based on the timing of customers' well schedules, a majority of the
fresh water services revenue is expected in the second half of
2019.
Mountain Valley Pipeline
The MVP JV is working through several alternatives to address
the project’s remaining legal and regulatory challenges. Although
completing the project during 2019 is unlikely, the MVP JV
continues to target a full in-service date for the fourth quarter
2019 at an overall project cost of $4.6 billion, of which EQM would
fund approximately $2.2 billion.
MVP Southgate
On November 6, 2018, MVP Southgate filed its certificate
application with the Federal Energy Regulatory Commission (FERC).
On March 22, 2019, the FERC issued a Notice of Schedule for the
project, which includes the expected delivery of the Final
Environmental Impact Statement in December 2019. The approximately
70-mile pipeline is expected to receive gas from the Mountain
Valley Pipeline (MVP) in Virginia and transport to new delivery
points in Rockingham and Alamance Counties, North Carolina. With a
total project cost estimate of $450 – $500 million, MVP Southgate
is backed by a 300 MMcf per day firm capacity commitment from PSNC
Energy and as designed, the pipeline has expansion capabilities up
to 900 MMcf per day of total capacity. Subject to FERC approval,
MVP Southgate has a targeted in-service date during the fourth
quarter of 2020. EQM has a 47.2% ownership interest in the MVP
Southgate project and will operate the pipeline.
Hammerhead Pipeline
Hammerhead is a gathering header pipeline that will span
approximately 64 miles from southwestern Pennsylvania to Mobley,
West Virginia, where both the MVP and the Ohio Valley Connector
originate. With a total project cost estimate of $555 million, 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 Corporation (EQT). In the first quarter 2019, EQM
invested approximately $55 million in Hammerhead and expects to
invest approximately $300 million in the project for the remainder
of 2019. Hammerhead is targeting an in-service during the fourth
quarter 2019.
Eureka Midstream and Hornet Midstream Acquisition
On April 10, 2019, EQM completed the acquisition of a 60%
interest in Eureka Midstream and a 100% interest in Hornet
Midstream for total consideration of $1,030 million, composed of
approximately $860 million in cash and approximately $170 million
of assumed pro-rata debt. EQM funded the acquisition with $1.2
billion of newly issued Series A Perpetual Convertible Preferred
Units.
Eureka Midstream assets consist of a 190-mile gathering header
pipeline system in Ohio and West Virginia that services both dry
Utica and wet Marcellus production. The Hornet pipeline is a
15-mile, high-pressure gathering system in West Virginia that
connects to the Eureka system.
Simplification Transaction
On February 22, 2019, ETRN, EQM and certain of their affiliates
closed the transaction to exchange and eliminate the EQM 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 are 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. Subsequent to the
simplification transaction, ETRN ownership in EQM consists of 117.2
million EQM common units, 7 million EQM Class B units, and the
non-economic general partner interest.
Shared Asset Transaction
On March 31, 2019, EQM acquired certain assets from ETRN for
approximately $49.7 million. The assets primarily support EQM’s
operations and include information technology systems, equipment,
and facilities. The purchase price reflects the net book value of
the in-service assets and any expenditures made with respect to
assets not yet in-service. Prior to the transaction, EQM made
quarterly payments to ETRN and incurred SG&A expense related to
the use of the in-service assets. Subsequent to the transaction,
EQM will incur depreciation expense related to those assets.
Q1 2019 Conference Call Information
ETRN and EQM will host a joint conference call with security
analysts today at 9:00 a.m. (ET) to discuss first quarter 2019
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) 385-2616. The ETRN/EQM joint conference ID
is 6365419.
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: 6365419.
ETRN and EQM management speak to investors from time-to-time and
the presentation for these discussions, which is updated
periodically, is available via the companies' respective websites
at www.equitransmidstream.com and
www.eqm-midstreampartners.com.
NON-GAAP DISCLOSURES
EQM Adjusted EBITDA and Distributable Cash Flow
As used in this earnings news release, EQM adjusted EBITDA means
net income attributable to EQM plus net interest expense,
depreciation, amortization of intangible assets, payments on EQM's
preferred interest in EQT Energy Supply, LLC (the Preferred
Interest), non-cash long-term compensation expense and separation
and other transaction costs less equity income, AFUDC – equity and
adjusted EBITDA of assets prior to acquisition. As used in this
earnings 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 expected
reimbursements, as adjusted, as applicable, for the noncontrolling
interest in Eureka Midstream. 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, as adjusted, as applicable, for the
noncontrolling interest in Eureka Midstream, and is not intended to
be a liquidity measure. Adjusted EBITDA and distributable cash flow
are non-GAAP supplemental financial measures that management and
external users of ETRN's and 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.
ETRN and EQM believe that adjusted EBITDA and distributable cash
flow provide useful information to investors in assessing ETRN's
and EQM’s results of operations and financial condition. Adjusted
EBITDA and distributable cash flow should not be considered as
alternatives to net 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
income and net cash provided by operating activities. Additionally,
because adjusted EBITDA and distributable cash flow may be defined
differently by other companies in ETRN's and EQM's industry, ETRN's
and 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
from net income and net cash provided by operating activities as
derived from EQM's statements of consolidated operations and cash
flows to be included in EQM’s Quarterly Report on Form 10-Q for the
three months ended March 31, 2019.
ETRN and EQM are unable to provide a reconciliation of EQM's
projected adjusted EBITDA from 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 capital expenditures is volatile as it
depends on weather, regulatory approvals, contractor availability,
system performance and various other items. EQM provides ranges for
the forecasts for the second quarter of 2019 and forecasts
reflecting rounding to the nearest $100 million for the 2019, 2020
and 2021 fiscal years of net income and adjusted EBITDA to allow
for the variability in the timing of cash receipts and
disbursements, capital spending and the impact on the related
reconciling items, many of which interplay with one another.
Therefore, the reconciliation of projected adjusted EBITDA from
projected net income is not available without unreasonable
effort.
Reconciliation of EQM Adjusted EBITDA
and Distributable Cash Flow
Three Months Ended March 31, (Thousands, except
coverage ratio)
2019 2018 Net income
attributable to EQM $ 251,931 $ 260,350 Add: Net interest
expense 49,356 12,670 Depreciation 47,065 41,280 Amortization of
intangible assets 10,387 10,386 Preferred Interest payments 2,746
2,746 Non-cash long-term compensation expense 255 499 Separation
and other transaction costs 3,513 — Less: Equity income (31,063 )
(8,811 ) AFUDC – equity (2,346 ) (1,065 ) Adjusted EBITDA
attributable to the Drop-Down Entities prior to acquisition —
(44,090 ) Adjusted EBITDA attributable to RMP prior to merger —
(69,534 )
Adjusted EBITDA $ 331,844 $ 204,431
Less: Net interest expense excluding interest income on the
Preferred Interest (50,962 ) (12,500 ) Capitalized interest and
AFUDC – debt (4,687 ) (817 ) Ongoing maintenance capital
expenditures net of expected reimbursements (9,398 ) (3,865 )
Distributable cash flow (1) $ 266,797 $
187,249
Distributions declared
(2): Limited Partner $ 229,524 $ 85,830 General
Partner — 46,491
Total $ 229,524 $ 132,321
Coverage ratio 1.16x 1.42x
Net cash provided by
operating activities $ 160,973 $ 283,958 Adjustments:
Capitalized interest and AFUDC – debt (4,687 ) (817 ) Principal
payments received on the Preferred Interest 1,141 1,079 Ongoing
maintenance capital expenditures net of expected reimbursements
(9,398 ) (3,865 ) Adjusted EBITDA attributable to the Drop-Down
Entities prior to acquisition — (44,090 ) Adjusted EBITDA
attributable to RMP prior to merger — (69,534 ) Other, including
changes in working capital 118,768 20,518
Distributable cash flow (1) $ 266,797 $
187,249
(1) EQM believes that calculating distributable cash flow
without deducting separation and other transaction costs provides
investors with greater insight into the period-to-period ability of
EQM’s ongoing assets and operations to generate cash flow. If
separation and other transaction costs were deducted from the
calculation, EQM’s distributable cash flow for the three-month
period ended March 31, 2019 would have been $263.3 million and
would not have changed for the three months ended March 31,
2018.
(2) Reflects cash distribution of $1.145 per common unit for the
first quarter of 2019 and 200,457,630 common units outstanding as
of March 31, 2019.
Water EBITDA
As used in this earnings news release, water EBITDA means the
earnings before interest, taxes, depreciation and amortization of
EQM’s water services business and reflects water opportunities as a
result of the Eureka Midstream and Hornet Midstream acquisition.
Water EBITDA is a non-GAAP supplemental financial measure that
management and external users of ETRN's and EQM’s consolidated
financial statements, such as industry analysts, investors, lenders
and rating agencies, use to assess the impact of EQM’s water
services business on ETRN's and EQM’s operating performance and
EQM’s ability to incur and service debt and fund capital
expenditures. Water EBITDA should not be considered as an
alternative to EQM’s water operating income or any other measure of
financial performance presented in accordance with GAAP. Water
EBITDA has important limitations as an analytical tool because the
measure excludes some, but not all, items that affect water
operating income. Additionally, because water EBITDA may be defined
differently by other companies in ETRN's and EQM’s industry, the
definition of water EBITDA may not be comparable to similarly
titled measures of other companies, thereby diminishing the utility
of the measure. The table below reconciles water EBITDA from EQM's
water operating income as derived from EQM's statements of
consolidated operations to be included in EQM's Quarterly Report on
Form 10-Q for the three months ended March 31, 2019.
EQM has not provided a reconciliation of projected water EBITDA
from projected water operating 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 water
EBITDA from projected water operating income is not available
without unreasonable effort.
Reconciliation of Water EBITDA
Three Months Ended March 31, (Thousands)
2019
2018 Water operating income $ 1,186 $ 15,312
Add: Depreciation 6,416 5,771
Water EBITDA $ 7,602
$ 21,083
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 natural gas gathering systems, transmission and storage
systems and water services assets that support natural gas
producers across the Appalachian 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 non-economic general
partner interest and a majority ownership of the limited partner
interest in EQM.
Visit Equitrans Midstream Corporation at
www.equitransmidstream.com
About EQM Midstream Partners:
EQM Midstream Partners, LP (EQM) 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 gathering systems, 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 also owns and/or operates approximately
2,400 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; the weighted average
contract life of gathering, transmission and storage and water
service contracts; infrastructure programs (including the timing,
cost, capacity and sources of funding with respect to gathering,
transmission and storage, and water expansion projects); the cost,
capacity, timing of regulatory approvals, final design and targeted
in-service dates of current projects; the ultimate terms, partners
and structure of the MVP JV, and EQM’s ownership interests in the
MVP JV; expansion and integration and optimization projects in
EQM’s operating areas and in areas that would provide access to new
markets; EQM’s ability to provide produced water handling services
and realize expansion and optimization and integration
opportunities and related capital avoidance; acquisitions and other
strategic transactions, including joint ventures and the completed
acquisition of interests in Eureka Midstream and Hornet Midstream,
and ETRN’s and EQM’s ability to identify and complete transactions,
and effectively integrate acquisitions (including Eureka Midstream
and Hornet Midstream) into EQM’s operations, and achieve
anticipated synergies and accretion associated with any
transactions, including through increased scale; EQM’s ability to
access commercial opportunities and new customers for its water
services business; credit rating impacts associated with the
Mountain Valley Pipeline, acquisitions and related financings;
expected cash flows and minimum volume commitments; 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
reimbursable capital expenditures, capital budget and sources of
funds for capital expenditures; liquidity and financing
requirements, including sources and availability; ETRN’s and EQM’s
and its subsidiaries’ respective abilities to service debt under,
and comply with the covenants contained in, their respective credit
agreements; expectations regarding growth of production volumes in
EQM’s areas of operation; the effect and outcome of pending and
future litigation and regulatory proceedings; dividend and
distribution amounts, timing, rates and growth; effects of the
conversion, if at all, of EQM securities; effect of commodity
prices; projected net income, projected adjusted EBITDA, projected
water EBITDA and fresh water deliveries (and the timing thereof),
projected distributable cash flow, projected leverage and projected
coverage ratio; projected SG&A and separation and transaction
costs; the timing and amount of future issuances of securities; the
effects of government regulation and tariffs; the effect of
seasonality; 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 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"
in ETRN's Annual Report on Form 10-K for the year ended December
31, 2018 filed with the SEC, as updated by Part II, Item 1A, "Risk
Factors," of ETRN’s Quarterly Report on Form 10-Q for the period
ended March 31, 2019 to be filed with the SEC, and (ii) Item 1A,
"Risk Factors" in EQM's Annual Report on Form 10-K for the year
ended December 31, 2018 filed with the SEC, as updated by Part II,
Item 1A, "Risk Factors," of EQM’s Quarterly Report on Form 10-Q for
the period ended March 31, 2019 to be filed with the SEC, in each
case as may be further 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.
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 CONDENSED CONSOLIDATED
COMPREHENSIVE INCOME (UNAUDITED)
Three Months Ended March 31, 2019
2018 (Thousands, except per share amounts)
Operating revenues (1) $ 389,782 $ 371,026 Operating expenses:
Operating and maintenance 27,883 27,172 Selling, general and
administrative 32,178 27,213 Separation and other transaction costs
8,782 15,573 Depreciation 50,511 41,342 Amortization of intangible
assets 10,387 10,386 Total operating expenses 129,741
121,686 Operating income 260,041 249,340 Equity income 31,063 8,811
Other income 1,861 904 Net interest expense 60,949 12,102
Income before income taxes 232,016 246,953 Income tax expense
32,450 23,209 Net income 199,566 223,744 Less: Net income
attributable to noncontrolling interests 143,267 141,015 Net
income attributable to ETRN $ 56,299 $ 82,729
Earnings per share of common stock attributable to ETRN (2): Basic:
Weighted average common stock outstanding 254,776 254,432
Net income $ 0.22 $ 0.33 Diluted: Weighted average common
stock outstanding 254,827 255,033 Net income $ 0.22 $
0.32
(1) Operating revenues included related party revenues from EQT
of $284.5 million and $265.6 million for the three months ended
March 31, 2019 and 2018, respectively.
(2) For the three months ended March 31, 2018, earnings per
share was calculated based on the shares of ETRN common stock
distributed in connection with ETRN's separation from EQT and is
considered pro forma in nature. Prior to its separation from EQT,
ETRN 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
(UNAUDITED) (1)
Three Months Ended March 31, 2019
2018 (Thousands, except per unit amounts)
Operating revenues (2) $ 389,782 $ 371,026 Operating expenses:
Operating and maintenance 27,883 27,172 Selling, general and
administrative 32,920 26,390 Separation and other transaction costs
3,513 — Depreciation 47,065 41,280 Amortization of intangibles
assets 10,387 10,386 Total operating expenses 121,768
105,228 Operating income 268,014 265,798 Equity
income 31,063 8,811 Other income 2,210 904 Net interest expense
49,356 12,670 Net income 251,931 262,843 Net income
attributable to noncontrolling interests — 2,493 Net
income attributable to EQM $ 251,931 $ 260,350
Calculation of limited partner interest in net income: Net income
attributable to EQM $ 251,931 $ 260,350 Less: Pre-acquisition net
income allocated to EQT — (83,132 ) Less: General partner interest
in net income – general partner units — (3,117 ) Less: General
partner interest in net income – IDRs — (44,164 ) Limited
partner interest in net income $ 251,931 $ 129,937
Net income per limited partner common unit – basic $ 1.63 $
1.61 Net income per limited partner common unit – diluted $ 1.56 $
1.61 Weighted average limited partner common units
outstanding – basic 154,259 80,607 Weighted average limited partner
common units outstanding – diluted 161,259 80,607
(1) EQM’s consolidated financial statements for the three months
ended March 31, 2018 have been retrospectively recast to include
the pre-acquisition results of RMP and the Drop-Down Entities.
(2) Operating revenues included related party revenues from EQT
of $284.5 million and $265.6 million for the three months ended
March 31, 2019 and 2018, respectively.
EQM MIDSTREAM PARTNERS, LP AND
SUBSIDIARIES
GATHERING RESULTS OF OPERATIONS
(1)
Three Months Ended March 31, 2019
2018 FINANCIAL DATA (Thousands, except per
day amounts) Firm reservation fee revenues (2) $ 128,959 $
109,933 Volumetric-based fee revenues 132,922 127,457 Total
operating revenues 261,881 237,390 Operating expenses: Operating
and maintenance 15,253 15,113 Selling, general and administrative
22,534 17,788 Separation and other transaction costs 3,513 —
Depreciation 28,116 23,068 Amortization of intangible assets 10,387
10,386 Total operating expenses 79,803 66,355
Operating income $ 182,078 $ 171,035
OPERATIONAL
DATA Gathering volumes (BBtu per day): Firm capacity
reservation (2) 2,572 1,956 Volumetric-based services 4,194
4,227 Total gathered volumes 6,766 6,183 Capital
expenditures (3) $ 207,717 $ 134,138
(1) EQM’s consolidated financial statements for the three months
ended March 31, 2018 have been retrospectively recast to include
the pre-acquisition results of RMP and the Drop-Down Entities.
(2) Includes revenues or volumes from contracts with minimum
volume commitments.
(3) Capital expenditures for the three months ended
March 31, 2019 include expenditures made to ETRN for the
Shared Asset Transaction of approximately $49.7 million.
EQM MIDSTREAM PARTNERS, LP AND
SUBSIDIARIES
TRANSMISSION RESULTS OF
OPERATIONS
Three Months Ended March 31, 2019
2018 FINANCIAL DATA (Thousands, except per
day amounts) Firm reservation fee revenues $ 99,224 $ 97,775
Volumetric-based fee revenues 10,635 9,159 Total operating
revenues 109,859 106,934 Operating expenses: Operating and
maintenance 4,084 7,551 Selling, general and administrative 8,492
7,491 Depreciation 12,533 12,441 Total operating expenses
25,109 27,483 Operating income $ 84,750 $ 79,451
Equity income $ 31,063 $ 8,811
OPERATIONAL
DATA Transmission pipeline throughput (BBtu per day): Firm
capacity reservation 2,959 2,815 Volumetric-based services 105
42 Total transmission pipeline throughput 3,064 2,857
Average contracted firm transmission reservation commitments
(BBtu per day)
4,442 4,140 Capital expenditures $ 18,762 $ 18,929
EQM MIDSTREAM PARTNERS, LP AND
SUBSIDIARIES
WATER RESULTS OF OPERATIONS
(1)
Three Months Ended March 31, 2019
2018 FINANCIAL DATA (Thousands) Water
services revenues $ 18,042 $ 26,702 Operating expenses: Operating
and maintenance 8,546 4,508 Selling, general and administrative
1,894 1,111 Depreciation 6,416 5,771 Total operating
expenses 16,856 11,390 Operating income $ 1,186 $
15,312
OPERATIONAL DATA Water services volumes
(MMgal) 369 541 Capital expenditures $ 9,175 $ 2,375
(1) EQM’s consolidated financial statements for the three months
ended March 31, 2018 have been retrospectively recast to include
the pre-acquisition results of RMP.
EQM MIDSTREAM PARTNERS, LP AND
SUBSIDIARIES
CAPITAL EXPENDITURE SUMMARY
(1)
Three Months Ended March 31, 2019
2018 (Thousands) Expansion capital
expenditures (2) (3) $ 176,509 $ 148,077 Maintenance capital
expenditures 9,428 7,365 Total capital expenditures $
185,937 $ 155,442
(1) EQM’s consolidated financial statements for the three months
ended March 31, 2018 have been retrospectively recast to include
the pre-acquisition results of RMP and the Drop-Down Entities.
(2) Expansion capital expenditures for the three months ended
March 31, 2019 and 2018 do not include capital contributions
made to the MVP JV of $144.8 million and $117.0 million,
respectively.
(3) Expansion capital expenditures for the three months ended
March 31, 2019 do not include expenditures made to ETRN for
the Shared Asset Transaction of approximately $49.7 million.
Source: Equitrans Midstream Corporation
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190430005496/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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