Equitrans Midstream Corporation (NYSE: ETRN) and EQM Midstream
Partners, LP (NYSE: EQM) today announced financial and operational
results for the second quarter 2019.
Q2 2019 Highlights:
- Generated 88% of transmission operating revenue from firm
reservation fees
- Generated 52% of gathering operating revenue from firm
reservation fees
- Delivered second quarter adjusted EBITDA ahead of Q2
guidance
"Our strong second quarter results were driven by solid
operations and cost discipline," said Thomas F. Karam, chairman and
chief executive officer of ETRN and EQM. "As we navigate the
reality of low commodity prices and slowdown in production growth,
our efforts to deliver efficient, cost-effective services to our
customers becomes even more important."
Diana M. Charletta, president and chief operating officer,
added, "Since closing the asset acquisition in April, I am
particularly pleased with the work that's been done to safely and
successfully integrate the Eureka and Hornet assets into our
processes and programs. We remain focused on being the low-cost
provider across all aspects of our business, and in doing so, we
must continue to manage costs and effectively deliver innovative
midstream solutions for our customers.
"At the same time, we will remain vigilant in the activities
surrounding MVP, our largest organic growth project. Along with
ongoing efforts to resolve MVP's few remaining legal and regulatory
challenges, construction is continuing in all permitted areas and
total project work is more than 85% complete," Charletta
continued.
SECOND QUARTER 2019 RESULTS
ETRN announced net income attributable to ETRN of $74.5 million
for the second quarter 2019; and ETRN will receive $136.0 million
in cash from its ownership in EQM. During the quarter, ETRN also
directly incurred $1.3 million of expenses.
For the second quarter 2019, net income attributable to EQM was
$152.4 million; adjusted EBITDA was $327.9 million; net cash
provided by operating activities was $349.3 million; and
distributable cash flow was $238.7 million. The Non-GAAP
Disclosures section of this news release provides reconciliations
of non-GAAP financial measures from their most comparable GAAP
financial measure.
ETRN and EQM net income for the second quarter was impacted by
an $80.1 million impairment expense related to the write-down of
non-core, FERC-regulated, low-pressure gathering assets. The
impairment was triggered by a change in asset groupings in the
second quarter 2019 related to regulatory rate making changes and
the current focus on high-pressure gathering assets. As a result of
the impairment, the assets carry no book value.
For the second quarter 2019, EQM operating revenue increased by
$31.5 million, or 8.4%, compared to the same quarter last year. The
increase in revenue was primarily related to higher contracted firm
gathering capacity, as well as the addition of the newly acquired
Eureka Midstream (Eureka) and Hornet Midstream (Hornet) assets, and
was partly offset by lower water services revenue. Operating
expenses increased by $109.9 million compared to the second quarter
2018, with $80.1 million related to the impairment of long-lived
assets and $10.0 million related to transaction costs. The
remaining increase was primarily related to the inclusion of the
acquired Eureka and Hornet assets, as well as higher system
throughput and additional assets placed in-service, which is
consistent with the growth in the business.
EQM's second quarter 2018 results have been retrospectively
recast to include the pre-acquisition results of Rice Midstream
Partners LP (RMP), as well as the Olympus gathering system and 75%
of the Strike Force gathering system (Drop-Down Entities), all of
which came under common control in 2017.
QUARTERLY DIVIDEND AND DISTRIBUTION
ETRN
For the second quarter 2019, ETRN will pay a quarterly cash
dividend of $0.45 per share on August 22, 2019 to ETRN shareholders
of record at the close of business on August 13, 2019.
EQM
For the second quarter 2019, EQM will pay a quarterly cash
distribution of $1.16 per common unit on August 13, 2019 to EQM
common unitholders of record at the close of business on August 2,
2019.
EQM EXPANSION AND ONGOING MAINTENANCE CAPITAL
EXPENDITURES
Expansion
Expansion capital expenditures and capital contributions to
Mountain Valley Pipeline, LLC (MVP JV) were $413 million for the
second quarter 2019 and $734 million year-to-date.
$MM
Three Months Ended
June 30, 2019
Six Months Ended
June 30, 2019
Full-year 2019
Forecast
Mountain Valley Pipeline
$150
$292
$1,000
Gathering(1)(2)
$235
$386
$950
Transmission(3)
$19
$38
$75
Water
$9
$18
$50
Total
$413
$734
$2,075
(1)
Does not reflect approximately $8.9 million and $58.6 million
for the three and six months ended June 30, 2019, respectively,
related to non-operating assets acquired by EQM from ETRN that
primarily support EQM's gathering activities (Shared Asset
Transaction).
(2)
Includes 60% of Eureka expansion capital expenditures from April
10, 2019 through June 30, 2019 and for the 2019 full-year
forecast.
(3)
Includes capital contributions to MVP JV for the MVP Southgate
project
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 and excluding the non-controlling
interest share of Eureka were $8.2 million for the second quarter
2019 and $17.5 million year-to-date. EQM forecasts full-year 2019
ongoing maintenance capital expenditures of $65 million, excluding
the non-controlling interest share of Eureka.
OUTLOOK
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 and reiterates an annual
ETRN dividend growth target of 8%.
EQM
The third quarter and full-year 2019 forecast provided below
reflects the acquisition of 60% of Eureka and 100% of Hornet, which
closed on April 10, 2019. Financial results of the Eureka joint
venture are consolidated in EQM and ETRN financial statements for
accounting purposes.
$MM
Q3 2019
Full-year 2019
Net Income attributable to EQM
$235 - $255
$900 - $950
Adjusted EBITDA
$315 - $335
$1,310 - $1,360
- Annual distribution per unit growth target of 6%
- Long-term distribution coverage target greater than 1.2x
- Long-term debt to EBITDA target of 3.5x - 4.0x
- Current project backlog expected to be funded with retained
cash flow and debt capacity
BUSINESS AND PROJECT UPDATES
Water Services
In response to continued lower natural gas prices, several
producer customers have modified their well development plans,
which impacts the expected timing of EQM's fresh water delivery
services. As a result, EQM now forecasts full-year 2019 water
EBITDA of $50 million and water expansion capital expenditures of
$50 million.
Mountain Valley Pipeline
The MVP JV is working through several alternatives to resolve
the project’s remaining legal and regulatory challenges. The MVP JV
targets a mid-2020 full in-service date at an overall project cost
of $4.8 billion to $5.0 billion, of which EQM would fund
approximately $2.4 billion.
MVP Southgate
On November 6, 2018, the MVP JV filed the MVP Southgate
certificate application with the Federal Energy Regulatory
Commission (FERC). On July 26, 2019, the FERC issued a Draft
Environmental Impact Statement for the project, and the Final
Environmental Impact Statement is expected in December 2019. The
approximately 70-mile pipeline is expected to receive gas from the
Mountain Valley Pipeline (MVP) in Virginia and transport the gas to
new delivery points in Rockingham and Alamance Counties, North
Carolina. With a total project cost estimate of $450 million to
$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 the FERC and other regulatory agency
approvals, MVP Southgate is targeting a fourth quarter 2020
in-service date. EQM has a 47.2% ownership interest in MVP
Southgate 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 MVP and the Ohio Valley Connector
originate. With a total estimated project cost 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 half of 2019, EQM
invested approximately $153 million in Hammerhead and expects to
invest approximately $200 million in the project for the remainder
of 2019. A portion of Hammerhead is expected to be operational by
year-end 2019 and will provide interruptible service until MVP is
placed in-service, at which time the firm capacity commitment will
begin.
Eureka Midstream and Hornet Midstream Acquisition
On April 10, 2019, EQM completed the acquisition of a 60%
interest in Eureka and a 100% interest in Hornet. The Eureka 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.
Equitrans Expansion Project
A portion of Equitrans Expansion Project (EEP) is expected to
commence operations with interruptible service in the third quarter
2019. EEP will provide capacity of approximately 600 MMcf per day
and offer access to several markets through interconnects with
Texas Eastern Transmission, Dominion Transmission, and Columbia Gas
Transmission. EEP will also provide delivery into MVP and once MVP
is placed in-service, firm transportation agreements for 550 MMcf
per day of capacity will commence under 20-year terms.
Q2 2019 Earnings Conference Call Information
ETRN and EQM will host a joint conference call with security
analysts today, July 30, 2019, at 9:00 a.m. (ET) to discuss second
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 7177601.
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: 7177601.
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 news release, EQM adjusted EBITDA means net
income plus net interest expense, depreciation, amortization of
intangible assets, impairment of long-lived assets, payments on
EQM's preferred interest in EQT Energy Supply, LLC (Preferred
Interest), non-cash long-term compensation expense and separation
and other transaction costs less equity income, AFUDC - equity,
adjusted EBITDA attributable to noncontrolling interest 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, ongoing
maintenance capital expenditures net of expected reimbursements,
and cash distributions earned by Series A preferred unitholders.
The impact of noncontrolling interests is also excluded from the
calculation of adjustment items to distributable cash flow.
Distributable cash flow should not be viewed as indicative of the
actual amount of cash that EQM has available for distributions or
that EQM plans to distribute 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 financial condition and results of operations. 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, operating 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 June 30,
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 third quarter of 2019 and full-year 2019 forecasts of net
income attributable to EQM 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 June
30,
(Thousands, except coverage ratio)
2019
2018
Net income
$
156,471
$
234,685
Add:
Net interest expense
49,717
23,065
Depreciation
56,515
42,110
Amortization of intangible assets
13,750
10,387
Impairment of long-lived assets
80,135
—
Preferred Interest payments
2,746
2,746
Non-cash long-term compensation
expense
—
140
Separation and other transaction costs
15,358
5,350
Less:
Equity income
(36,782
)
(10,938
)
AFUDC – equity
(2,107
)
(1,072
)
Adjusted EBITDA attributable to
noncontrolling interest (1)
(7,916
)
—
Adjusted EBITDA attributable to the
Drop-Down Entities prior to acquisition
—
(17,270
)
Adjusted EBITDA attributable to RMP prior
to merger
—
(79,695
)
Adjusted EBITDA
$
327,887
$
209,508
Less:
Net interest expense excluding interest
income on the Preferred Interest (5)
(50,521
)
(22,336
)
Capitalized interest and AFUDC – debt
(5)
(7,564
)
(1,940
)
Ongoing maintenance capital expenditures
net of expected reimbursements (5)
(8,151
)
(7,115
)
Series A Preferred Unit distributions
(4)
(22,979
)
—
Distributable cash flow (2)
$
238,672
$
178,117
Distributions declared (3):
Limited Partner
$
232,531
$
131,295
General Partner
—
70,510
Total
$
232,531
$
201,805
Coverage ratio
1.03x
0.88x
Net cash provided by operating
activities
$
349,270
$
338,950
Adjustments:
Capitalized interest and AFUDC – debt
(5)
(7,564
)
(1,940
)
Principal payments received on the
Preferred Interest
1,157
1,093
Ongoing maintenance capital expenditures
net of expected reimbursements (5)
(8,151
)
(7,115
)
Adjusted EBITDA attributable to
noncontrolling interest (1)
(7,916
)
—
Adjusted EBITDA attributable to the
Drop-Down Entities prior to acquisition
—
(17,270
)
Adjusted EBITDA attributable to RMP prior
to merger
—
(79,695
)
Series A Preferred Unit distributions
(4)
(22,979
)
—
Other, including changes in working
capital
(65,145
)
(55,906
)
Distributable cash flow (2)
$
238,672
$
178,117
(1)
Reflects adjusted EBITDA
attributable to noncontrolling interest associated with the
third-party ownership interest in Eureka. Adjusted EBITDA
attributable to noncontrolling interest for the three months ended
June 30, 2019 was calculated as net income of $4.9 million plus
depreciation of $2.2 million and interest expense of $0.8
million.
(2)
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 periods ended June 30, 2019 and 2018 would have
been $223.3 million and $172.8 million, respectively.
(3)
Reflects cash distribution of
$1.160 per common unit for the second quarter of 2019 and
200,457,630 common units outstanding as of June 30, 2019.
(4)
Reflects the pro rata
distribution to EQM's Series A preferred units based on the closing
of the private placement of such units on April 10, 2019. The
Series A preferred unitholders' distribution is payable on August
13, 2019.
(5)
Does not reflect amounts related
to the non-controlling interest share of Eureka
Water EBITDA
As used in this news release, water EBITDA means the earnings
before interest, taxes, depreciation and amortization of EQM’s
water services business. 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 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. Water EBITDA should not be considered as an
alternative to the operating income of EQM’s Water segment, EQM’s
net 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 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.
EQM has not provided a reconciliation of projected water EBITDA
from projected water operating income, the most comparable
financial 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.
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 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 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 and its
subsidiaries’ gathering, transmission and storage and water
services revenue and volume growth; projected revenue (including
from firm reservation fees) 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 ability of the MVP JV to
satisfy the applicable federal agencies’ land exchange procedures
and consummate the land exchange on a timely basis or at all; the
ultimate terms, partners and structure of the MVP JV, and EQM’s
ownership interests therein; projected shipper reimbursement
obligations under MVP-related contracts; 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
and Hornet, and ETRN’s and EQM’s ability to identify and complete
transactions, and effectively integrate transactions (including
Eureka and Hornet) into EQM’s operations, and achieve anticipated
synergies, system optionality 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, customer credit ratings, acquisitions and
financings and changes in EQM’s credit ratings; 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 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 firm project 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;
impacts of a change of control of EQT Corporation; 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 may be updated by Part II, Item 1A,
"Risk Factors," of ETRN’s subsequent Quarterly Reports on Form 10-Q
filed or 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 may be updated by Part II, Item 1A,
"Risk Factors," of EQM’s subsequent Quarterly Reports on Form 10-Q
filed or to be filed with the SEC. 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, unless required by securities laws,
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 June
30,
2019
2018
(Thousands, except per share
amounts)
Operating revenues (1)
$
406,167
$
374,697
Operating expenses:
Operating and maintenance
46,556
43,270
Selling, general and administrative
27,224
28,260
Separation and other transaction costs
15,568
15,741
Depreciation
56,759
42,171
Amortization of intangible assets
13,750
10,387
Impairment of long-lived assets
80,135
—
Total operating expenses
239,992
139,829
Operating income
166,175
234,868
Equity income
36,782
10,938
Other income
706
944
Net interest expense
61,713
19,884
Income before income taxes
141,950
226,866
Income tax expense
11,470
7,259
Net income
130,480
219,607
Net income attributable to noncontrolling
interests
55,959
118,540
Net income attributable to ETRN
$
74,521
$
101,067
Earnings per share of common stock
attributable to ETRN (2):
Basic:
Weighted average common stock
outstanding
254,917
254,432
Net income
$
0.29
$
0.40
Diluted:
Weighted average common stock
outstanding
254,967
255,033
Net income
$
0.29
$
0.40
(1)
Operating revenues included
related party revenues from EQT (NYSE: EQT) of $284.0 million and
$285.3 million for the three months ended June 30, 2019 and 2018,
respectively.
(2)
For the three months ended June
30, 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 June
30,
2019
2018
(Thousands, except per unit
amounts)
Operating revenues (2)
$
406,167
$
374,697
Operating expenses:
Operating and maintenance
46,556
43,270
Selling, general and administrative
26,406
27,712
Separation and other transaction costs
15,358
5,350
Depreciation
56,515
42,110
Amortization of intangibles assets
13,750
10,387
Impairment of long-lived assets
80,135
—
Total operating expenses
238,720
128,829
Operating income
167,447
245,868
Equity income
36,782
10,938
Other income
1,959
944
Net interest expense
49,717
23,065
Net income
156,471
234,685
Net income attributable to noncontrolling
interests
4,033
853
Net income attributable to EQM
$
152,438
$
233,832
Calculation of limited partner interest in
net income:
Net income attributable to EQM
$
152,438
$
233,832
Less: Series A Preferred Units interest in
net income
(22,979
)
—
Less: Pre-acquisition net income allocated
to EQT
—
(72,620
)
Less: General partner interest in net
income – general partner units
—
(1,700
)
Less: General partner interest in net
income – IDRs
—
(68,121
)
Limited partner interest in net income
$
129,459
$
91,391
Net income per limited partner common unit
– basic
$
0.65
$
1.09
Net income per limited partner common unit
– diluted
$
0.62
$
1.09
Weighted average limited partner common
units outstanding – basic
200,482
83,553
Weighted average limited partner common
units outstanding – diluted
207,482
83,553
(1)
EQM’s consolidated financial
statements for the three months ended June 30, 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 (NYSE: EQT) of $284.0 million and
$285.3 million for the three months ended June 30, 2019 and 2018,
respectively.
EQM MIDSTREAM PARTNERS, LP AND
SUBSIDIARIES
GATHERING RESULTS OF
OPERATIONS (1)
Three Months Ended June
30,
2019
2018
FINANCIAL DATA
(Thousands, except per day
amounts)
Firm reservation fee revenues (2)
$
147,771
$
111,702
Volumetric-based fee revenues
137,895
129,487
Total operating revenues
285,666
241,189
Operating expenses:
Operating and maintenance
25,480
20,588
Selling, general and administrative
19,369
19,164
Separation and other transaction costs
15,358
5,350
Depreciation
37,443
23,882
Amortization of intangible assets
13,750
10,387
Impairment of long-lived assets
80,135
—
Total operating expenses
191,535
79,371
Operating income
$
94,131
$
161,818
OPERATIONAL DATA
Gathering volumes (BBtu per day):
Firm capacity reservation (2)
2,863
2,007
Volumetric-based services
5,042
4,202
Total gathered volumes
7,905
6,209
Capital expenditures (3)(4)
$
265,198
$
186,457
(1)
EQM’s consolidated financial
statements for the three months ended June 30, 2018 have been
retrospectively recast to include the pre-acquisition results of
RMP and the Drop-Down Entities.
(2)
Includes revenues and volumes
from contracts with minimum volume commitments.
(3)
Capital expenditures for the
three months ended June 30, 2019 include expenditures made to ETRN
for the Shared Asset Transaction of approximately $8.9 million.
(4)
Includes approximately $10.9
million of capital expenditures related to noncontrolling interests
in Eureka Midstream for the three months June 30, 2019.
EQM MIDSTREAM PARTNERS, LP AND
SUBSIDIARIES
TRANSMISSION RESULTS OF
OPERATIONS
Three Months Ended June
30,
2019
2018
FINANCIAL DATA
(Thousands, except per day
amounts)
Firm reservation fee revenues
$
81,836
$
82,222
Volumetric-based fee revenues
10,931
6,923
Total operating revenues
92,767
89,145
Operating expenses:
Operating and maintenance
10,082
8,810
Selling, general and administrative
6,847
7,263
Depreciation
12,594
12,430
Total operating expenses
29,523
28,503
Operating income
$
63,244
$
60,642
Equity income
$
36,782
$
10,938
OPERATIONAL DATA
Transmission pipeline throughput (BBtu per
day):
Firm capacity reservation
2,647
2,826
Volumetric-based services
211
41
Total transmission pipeline throughput
2,858
2,867
Average contracted firm transmission
reservation commitments
(BBtu per day)
3,649
3,607
Capital expenditures
$
11,229
$
27,962
EQM MIDSTREAM PARTNERS, LP AND
SUBSIDIARIES
WATER RESULTS OF OPERATIONS
(1)
Three Months Ended June
30,
2019
2018
FINANCIAL DATA
(Thousands)
Water services revenues
$
27,734
$
44,363
Operating expenses:
Operating and maintenance
10,994
13,872
Selling, general and administrative
190
1,285
Depreciation
6,478
5,798
Total operating expenses
17,662
20,955
Operating income
$
10,072
$
23,408
OPERATIONAL DATA
Water services volumes (MMgal)
619
750
Capital expenditures
$
8,849
$
7,002
(1)
EQM’s consolidated financial
statements for the three months ended June 30, 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 June
30,
2019
2018
(Thousands)
Expansion capital expenditures (2)(3)
$
266,970
$
213,628
Maintenance capital expenditures
9,426
7,793
Total capital expenditures(4)
$
276,396
$
221,421
(1)
EQM’s consolidated financial
statements for the three months ended June 30, 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 June 30, 2019 and 2018 do not include
capital contributions made to the MVP JV of $156.4 million and
$65.8 million, respectively.
(3)
Expansion capital expenditures
for the three months ended June 30, 2019 do not include
expenditures made to ETRN for the Shared Asset Transaction of
approximately $8.9 million.
(4)
Includes approximately $10.9
million of capital expenditures related to noncontrolling interests
in Eureka Midstream for the three months June 30, 2019.
Source: Equitrans Midstream Corporation
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190730005300/en/
Analyst inquiries: Nate Tetlow – Vice President,
Corporate Development and Investor Relations 412-553-5834
ntetlow@equitransmidstream.com
Media inquiries: Natalie Cox – Director, Communications
and Corporate Affairs 412-395-3941 ncox@equitransmidstream.com
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