EQT Corporation has announced a major financial move with Blackstone Credit & Insurance, forming a new midstream joint venture (JV) and receiving $3.5 billion in cash consideration. The JV is valued at approximately $8.8 billion, with an implied 12x EBITDA multiple. The transaction will allow EQT to pay down its term loan and revolving credit facility, as well as redeem and tender for senior notes, with expectations to exit 2024 with around $9 billion of net debt.
The joint venture will include EQT’s ownership interest in high-quality contracted infrastructure assets such as the Mountain Valley Pipeline, LLC – Series A, FERC regulated transmission and storage assets, and the Hammerhead Pipeline. Additionally, EQT will retain the rights to growth projects associated with the assets contributed to the JV, including the planned Mountain Valley Pipeline expansion and the MVP Southgate project.
This move aligns with EQT’s strategy of debt reduction, with the company having announced divestitures totaling $5.25 billion of projected cash proceeds, exceeding the high-end of its $3-$5 billion asset sale target, and ahead of schedule. The transaction is expected to close in the fourth quarter of 2024, subject to customary closing adjustments and required regulatory approvals and clearances.
The company's management believes that net debt provides useful information to investors regarding the company's financial condition and helps them evaluate the company's leverage, especially since the company could choose to use its cash and cash equivalents to retire debt. Today the company's shares have moved 2.6% to a price of $47.09. For the full picture, make sure to review EQT's 8-K report.
