EQT Corp. (NYSE: EQT) dropped down several Marcellus assets to its midstream subsidiary for $275 million in cash.
EQT Midstream Partners LP (NYSE: EQM) said Oct. 13 it acquired the Allegheny Valley Connector (AVC) transmission and storage system, along with several Marcellus gathering systems from Pittsburgh-based EQT Corp.
The AVC system, which is regulated by the Federal Energy Regulatory Commission, includes about 209 miles of transmission pipeline and 11 billion cubic feet (Bcf) of working gas storage capacity. The system has 450 MMcf per day of transmission capacity and is fully contracted for the winter season by Peoples Natural Gas through a commitment that expires in 2034.
EQT Midstream said it expects to invest about $50 million in AVC related growth projects during the remainder of 2016 and into 2017.
The AVC is expected to generate EBITDA of $31 million in 2017, increasing to $35 million in 2018.
The newly acquired gathering assets consist primarily of the Applegate, McIntosh and Terra systems in Pennsylvania, and the Taurus system in West Virginia. They include 87 miles of gathering pipeline, an estimated 7,000 horsepower (hp) of compression and provide 370 MMcf/d of gathering capacity.
EQT Midstream said it expects to invest about $105 million over the next several years to complete planned expansion projects on the assets. This includes the installation of about 20 miles of gathering pipeline and four compressor units with 20,000 hp of compression.
Upon completion of the expansion projects, EQT’s total firm capacity will increase to 365 MMcf/d from its current 235 MMcf/d under a 10-year contract on the systems.
The gathering systems are expected to generate EBITDA of $16 million in 2017, increasing to $30 million in 2018, according to the release.
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