EQT Announces Plan to Separate Midstream Business

EQT Corporation today announced that its Board of Directors has unanimously approved a plan to separate its upstream and midstream businesses, creating a standalone publicly traded corporation (NewCo) that will focus on midstream operations. The separation is expected to be completed by the end of the third quarter 2018. Under the separation plan, EQT shareholders will retain their shares of EQT stock and receive a pro-rata share of the new independent midstream company. Both companies will remain headquartered in Pittsburgh.

“The decision to build our midstream business in parallel with upstream growth has created one of the strongest midstream companies in the Appalachian Basin,” said James Rohr, EQT’s lead independent director. “We have taken many steps to highlight the value of our midstream assets through a series of transactions including, the initial public offering of EQM, midstream asset dropdowns to EQM, and the initial public offering of EQGP. This transaction represents a new chapter for our business as we unlock the value created during the past 10 years.”

Plans of action prior to separation

  • A drop-down of the retained midstream assets in an accretive transaction to EQT Midstream Partners, LP (EQM).
  • A merger of EQM and Rice Midstream Partners LP in an accretive transaction.
  • A sale of the RMP Incentive Distribution Rights (IDRs) to EQT GP Holdings, LP (EQGP) Under EQT’s plan, EQGP will retain the EQM IDRs, and EQGP and EQM will remain separate publicly traded entities after separation. EQT does not intend to modify its existing gathering and transmission contracts with EQM in connection with the separation.

Upon completion of the separation, Steve Schlotterbeck will remain CEO of EQT, and Jerry Ashcroft, senior vice president and president, midstream for EQT and senior vice president and chief operating officer of EQM, will lead NewCo as chief executive officer.

The proposed separation is subject to customary conditions, including receipt of a favorable opinion of legal counsel and/or a private letter ruling from the Internal Revenue Service with respect to the tax treatment of the transaction for U.S. federal income tax purposes, the effectiveness of a Form 10 registration statement to be filed with the Securities and Exchange Commission (SEC) for the shares of NewCo, and final approval and declaration of the spin-off dividend by the EQT Board of Directors.

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