The board of directors of EQT has given its nod to the spin-off of Equitrans Midstream (ETRN), a company that has been recently formed to hold its midstream business.
Equitrans Midstream was created after EQT’s decision to separate its upstream and midstream businesses.
EQT plans to implement the spin-off via a pro rata distribution of 80.1% of the outstanding common stock of the newly created midstream business. The US-based oil and gas exploration and pipeline transport company will hold the remaining stake of 19.9% in the separated business.
Upon its separation, Equitrans Midstream will own the general partner interest along with a 91.3% limited partner interest in EQGP, which in turn owns the general partner interest, all the incentive distribution rights, and around 17.9% limited partner interest in EQM Midstream Partners.
In addition to that, Equitrans Midstream will own nearly 12.7% limited partner interest in EQM Midstream, which owns, operates, acquires and develops natural gas gathering, transmission and storage, and water services assets located in the Appalachian Basin.
EQM owns nearly 1528km of interstate pipelines and around 3,427km of high- and low-pressure gathering lines in the US.
After the spin-off of Equitrans Midstream, EQT will retain ownership in its upstream business, which is among the leading producers of natural gas in the US in terms of average daily sales volume.
It was in February 2018 when EQT said that its board of directors had approved a plan to separate the company’s upstream and midstream businesses to create an independent publicly traded corporation that will focus on midstream operations.
The separation of the upstream and midstream businesses was planned to qualify as tax-free to EQT shareholders for federal income tax purposes in the US.
Last year, EQT signed a deal to acquire Rice Energy, an independent natural gas and oil company engaged in the exploration and development of natural gas and oil assets in the Appalachian Basin, for about $6.7bn.
Earlier this year, EQT divested nearly 2.5 million net acres in the Huron Play in Southern Appalachia to Diversified Gas and Oil for $575m. The sale of the non-core assets was taken up by EQT to cut down its net-debt.