EQT Corp., Pittsburgh, will sell its Equitable Gas Co. LLC natural gas distribution business to Peoples Natural Gas, which has agreed to enter into long-term contracts for gas transmission, supply, and storage with EQT.
EQT will receive cash proceeds of $720 million, subject to adjustments, and select midstream assets and commercial arrangements that are expected to generate at least $40 million/year in earnings before interest, taxes, depreciation, and amortization. The agreements will secure supply of Marcellus gas of 35 bcf/year to Peoples.
Required regulatory approvals are expected to be received by the end of 2013.
EQT’s two remaining core businesses are a capital-intensive, rapidly growing production business and a midstream business. EQT said the proposed transaction provides capital to accelerate the monetization of its reserves beyond 2013 and also adds to its Marcellus midstream assets.
As part of the transaction, EQT will receive 200 miles of regulated transmission pipelines and four storage reservoirs that have a combined 15.1 bcf of working gas capacity. The pipelines and storage fields are strategically located across multiple counties in Pennsylvania and connect to EQT’s existing transmission assets.
Peoples Natural Gas is a subsidiary of SteelRiver Infrastructure Fund of North America. SteelRiver Infrastructure Fund acquired Peoples Natural Gas from Dominion Resources in 2010. In 2011, the company purchased Peoples TWP, formerly T.W. Phillips Gas & Oil Co. Peoples Natural Gas and its sister company, Peoples TWP, serve 420,000 homes and businesses in 18 western Pennsylvania counties.