EQGP Eqgp Holdings, Lp

EQT Midstream Partners, LP (NYSE: EQM) today announced its 2017 financial and capital expenditure (CAPEX) forecast. EQM net income is projected to be $555 - $595 million, adjusted EBITDA is expected to be $670 - $710 million, and distributable cash flow is expected to be $590 - $630 million. At least 80% of 2017 revenue is expected to be generated from firm reservation fees under long-term contracts. See the Non-GAAP Disclosures section for important disclosures regarding adjusted EBITDA and distributable cash flow, which are non-GAAP financial measures, along with disclosures regarding the most comparable GAAP financial measures.

Also announced today by EQT, is a modification to the Company’s midstream agreement with Williams Ohio Valley Midstream, LLC (Williams) related to the dedicated portion of the approximately 62,500 Marcellus acres EQT acquired from Statoil USA Onshore Properties, Inc. earlier this year. Under the new agreement, EQT has committed firm volumes of 50 MMcfe per day initially and growing to 200 MMcfe per day by the fourth year. In addition to the existing right to provide wellhead gathering services, EQM can now provide high pressure pipeline services on the volume in excess of the commitment. EQM is currently coordinating with EQT Production to design a midstream system to support the Marcellus well development plans on this acreage. The investment opportunity for EQM is estimated to be $600 million for full buildout of wellhead gathering and high pressure pipeline services.

Distributions:

EQM forecasts 20% growth in the annual per unit distribution in 2017, which will result in EQT GP Holdings, LP (NYSE: EQGP) per unit distribution growth of approximately 40%.

Beginning in 2018, EQM is targeting annual per unit distribution growth of 15% - 20% for several years. For EQGP, the corresponding annual per unit distribution growth target is 30% - 40%.

EQM Capital Expenditures & Contributions:

EQM forecasts 2017 growth CAPEX and capital contributions to Mountain Valley Pipeline, LLC (MVP JV), to be approximately $500 - $850 million; and ongoing maintenance CAPEX to be approximately $35 million, net of expected reimbursements.

$MM     2017 Growth CAPEX Mountain Valley Pipeline (MVP) $200 - $500 Gathering $200 - $230 Transmission $60 - $80 Header Pipeline $40 Total $500 - $850  

2017 Growth Projects

Mountain Valley Pipeline

The capital investments are related to materials, land, engineering design, environmental work, and construction activities. Based on the previously issued Notice of Schedule by the Federal Energy Regulatory Commission (FERC), MVP JV expects the Final Environmental Impact Study to be published in March 2017. MVP JV has secured a total of 2 Bcf per day of firm capacity commitments at 20-year terms and is targeting a late 2018 in-service date.

Gathering

EQM plans to install approximately 30 miles of gathering pipeline and 10,000 horsepower compression in its gathering systems across Northern West Virginia and Southwestern Pennsylvania during 2017. The gathering investments are supported by EQT Production development on its core Marcellus acreage position.

Transmission

EQM transmission investments include Equitrans expansion projects and modernization projects on the Allegheny Valley Connector (AVC). The Equitrans expansion projects are designed to increase deliverable capacity to EQM’s Mobley hub, which is the origin of both the Ohio Valley Connector and the MVP. The projects include additional compression, pipeline looping and new header pipelines. In total, the projects will add up to 1.5 Bcf per day of capacity by the end of 2018, consistent with the expected MVP in-service date. The AVC modernization projects primarily consist of the replacement of approximately 20 miles of pipeline.

Header Pipeline

On October 1, 2016, phase one of the natural gas header pipeline for Range Resources was placed into service, providing 75 MMcf per day of firm capacity. EQM expects to complete construction of the project’s second phase in Q2 of 2017, which includes the installation of approximately 25 miles of pipeline and 32,000 horsepower compression. Upon completion, the header pipeline will provide total firm capacity of 600 MMcf per day, which is fully reserved under a ten-year contract.

Year-end Earnings Information:

EQM and EQGP intend to release full-year 2016 earnings and host a live webcast for security analysts on February 2, 2017. The webcast will be available at www.eqtmidstreampartners.com and will begin at 11:30 a.m. ET.

NON-GAAP DISCLOSURES

EQM Adjusted EBITDA and Distributable Cash Flow

As used in this news release, EQM defines adjusted EBITDA as net income plus interest expense, depreciation and amortization expense, income tax expense (benefit) (if applicable), Preferred Interest payments received post conversion and non-cash long-term compensation expense less other non-cash adjustments (if applicable), equity income, AFUDC – equity, capital lease payments and adjusted EBITDA of acquisitions prior to the acquisition dates. As used in this news release, EQM defines distributable cash flow as adjusted EBITDA less interest expense excluding capital lease interest and interest income on the Preferred Interest, capitalized interest and AFUDC – debt, and ongoing maintenance capital expenditures net of reimbursements. 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 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 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 their utility.

EQM has not provided projected net cash provided by operating activities or reconciliations of its projected adjusted EBITDA and projected distributable cash flow to projected net income and projected net cash provided by operating activities, the most comparable financial measures calculated in accordance with GAAP. EQM is unable to project net cash provided by operating activities because this metric includes the impact of changes in operating assets and liabilities related to the timing of cash receipts and disbursements that may not relate to the period in which the operating activities occurred. EQM is unable to project these timing differences with any reasonable degree of accuracy to a specific day, three or more months in advance. Therefore, EQM is unable to provide projected net cash provided by operating activities, or the related reconciliation of projected distributable cash flow to projected net cash provided by operating activities. Further, EQM does not provide guidance with respect to the intra-year timing of its or 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 a range for the forecasts of net income, adjusted EBITDA and distributable cash flow to allow for the variability in the timing of spending and the impact on the related reconciling items, many of which interplay with each other. Therefore, the reconciliations of projected adjusted EBITDA to projected net income and projected net cash provided by operating activities to distributable cash flow are not available without unreasonable effort.

About EQT Midstream Partners:

EQT Midstream Partners, LP is a growth-oriented limited partnership formed by EQT Corporation to own, operate, acquire, and develop midstream assets in the Appalachian Basin. The Partnership provides midstream services to EQT Corporation and third-party companies through its strategically located transmission, storage, and gathering systems that service the Marcellus and Utica regions. The Partnership owns approximately 950 miles of FERC-regulated interstate pipelines; and also owns approximately 1,800 miles of high- and low-pressure gathering lines.

Visit EQT Midstream Partners, LP at www.eqtmidstreampartners.com.

About EQT GP Holdings:

EQT GP Holdings, LP is a limited partnership that owns the general partner interest, all of the incentive distribution rights, and a portion of the limited partner interests in EQT Midstream Partners, LP. EQT Corporation owns a 90% limited partner interest in EQT GP Holdings, LP.

Visit EQT GP Holdings, LP at www.eqtmidstreampartners.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 EQGP and its subsidiaries, including EQM, including guidance regarding infrastructure programs (including the timing, cost, capacity, expected interconnects with facilities and pipelines and sources of funding with respect to transmission and gathering projects, including the MVP project); the timing, cost, capacity and expected interconnects with facilities and pipelines of the MVP; compound annual growth rate; projected capital commitments, projected capital contributions and projected capital expenditures, including the amount and timing of capital expenditures reimbursable by EQT, capital budget and sources of funds for capital expenditures; distribution amounts, rates and growth; projected net income, projected adjusted EBITDA and projected distributable cash flow; projected revenues generated from firm reservation fees under long-term contracts; future EQT plans for volumes in excess of EQT’s commitments to Williams; and liquidity and financing requirements, including funding sources and availability. 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. EQM and EQGP have based these forward-looking statements on current expectations and assumptions about future events. While EQM and EQGP 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 partnerships’ control. The risks and uncertainties that may affect the operations, performance and results of EQM’s and EQGP’s business and forward-looking statements include, but are not limited to, those set forth under Item 1A, “Risk Factors” of EQM’s Form 10-K for the year ended December 31, 2015 as filed with the SEC and Item 1A, “Risk Factors” of EQGP’s Form 10-K for the year ended December 31, 2015 as 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 EQM nor EQGP 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 Corporation and its subsidiaries, other than EQM and EQGP, is derived from publicly available information published by EQT.

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EQT Midstream Partners analyst inquiries please contact:Nate Tetlow – Investor Relations Director, 412-553-5834ntetlow@eqtmidstreampartners.comorEQT analyst inquiries please contact:Patrick Kane – Chief Investor Relations Officer, 412-553-7833pkane@eqtmidstreampartners.comorMedia inquiries please contact:Natalie Cox – Corporate Director, Communications, 412-395-3941ncox@eqtmidstreampartners.com