8-KOther Events

EQT Corp 8-K Report, Corporate Update (May 22, 2018)

Filed May 22, 2018For Securities:EQT

Summary

EQT Corporation (EQT) filed an 8-K on May 22, 2018, detailing the completion of two significant transactions related to its midstream assets. Firstly, EQT Midstream Partners, LP (EQM), a subsidiary of EQT, finalized the "Drop-Down Transaction" by acquiring three midstream entities (Rice West Virginia, Rice Olympus, and Strike Force Holdings) from EQT. This acquisition was structured with EQM issuing 5.9 million common units and providing $1.15 billion in cash to EQT. These acquired assets will ultimately reside within a new, publicly traded midstream company (NewCo) post-separation. Secondly, EQT completed the "IDR Transaction," where its subsidiary EQGP acquired all incentive distribution rights (IDRs) in Rice Midstream Partners LP from another EQT subsidiary. This transaction increased EQT's ownership in EQGP from 90.1% to 91.3%. Similar to the Drop-Down Transaction, EQT's stake in EQGP will transfer to NewCo following the separation of EQT's production and midstream businesses. These transactions are crucial steps in EQT's strategy to separate and create a dedicated midstream entity, allowing investors to evaluate the upstream (production) and midstream businesses independently.

Key Highlights

  • 1EQT Corporation's subsidiary, EQT Midstream Partners, LP (EQM), completed the "Drop-Down Transaction" to acquire three midstream entities.
  • 2EQM paid EQT approximately $1.15 billion in cash and issued 5,889,282 EQM common units as consideration for the acquired midstream assets.
  • 3The acquired midstream assets (Rice West Virginia, Rice Olympus, Strike Force Holdings) will become wholly owned subsidiaries of EQM.
  • 4EQT completed the "IDR Transaction," increasing its ownership stake in EQGP (its midstream general partner) from 90.1% to 91.3% through the acquisition of incentive distribution rights.
  • 5These transactions are preparatory steps for EQT's planned separation of its production and midstream businesses into a new, publicly traded entity (NewCo).
  • 6The EQM common units and EQGP common units received by EQT in these transactions will be transferred to NewCo post-separation.

Frequently Asked Questions

These transactions are strategic moves by EQT Corporation to prepare for the separation of its upstream (production) and midstream businesses into a new, publicly traded company, referred to as "NewCo". The Drop-Down Transaction moves midstream assets into EQT Midstream Partners, LP (EQM), while the IDR Transaction consolidates ownership of incentive distribution rights within EQGP, EQ T's midstream general partner. This separation aims to allow investors to value the distinct businesses more effectively.

EQT Corporation received aggregate cash consideration of $1.15 billion, subject to customary purchase price adjustments, as part of the Drop-Down Transaction.

In the Drop-Down Transaction, EQT received EQM common units, which will be held by NewCo post-separation. In the IDR Transaction, EQT's percentage ownership of EQGP common units increased from approximately 90.1% to approximately 91.3%. This increased stake in EQGP will also be transferred to NewCo.

This 8-K filing from May 22, 2018, indicates these transactions are preparatory for a future separation. The exact timeline for the separation and the formation of "NewCo" is not detailed in this specific filing but was a stated strategic objective at the time.