EQT Midstream Partners, LP (NYSE:EQM), an EQT Corporation company, today
announced its 2014 financial and capital expenditure (CAPEX) forecast.
Adjusted EBITDA is expected to be $170 - $175 million and distributable
cash flow is expected to be $148 - $153 million. The adjusted EBITDA,
distributable cash flow and CAPEX forecasts do not include financial
impacts of potential acquisitions. See the Non-GAAP Disclosures section
below for important information regarding the non-GAAP financial
measures included in this news release.
Distributions:
EQT Midstream Partners, LP (Partnership) forecasts quarterly
distribution increases of at least $0.03 per unit through the end of
2014. The distribution forecast is based on accretion from the 2013
acquisition of the Sunrise Pipeline and expected organic growth, which
is driven by ongoing development of the Marcellus shale. The 2014
expected per unit distribution of $2.14 is 29% higher than the 2013
expected per unit distribution of $1.66. The Partnership forecasts a
coverage ratio of 1.1x – 1.5x during this time period.
Capital Expenditures:
The Partnership forecasts total CAPEX to be approximately $80 - $85
million in 2014, and expects to increase Equitrans transmission capacity
by 650 BBtu per day in 2014, which will bring the total transmission
throughput capacity to 2.9 TBtu per day.
Expansion
The Partnership expects to complete the fully subscribed Jefferson
compression expansion project in the third quarter of 2014, which will
add 550 BBtu per day of transmission capacity. The Jefferson compression
expansion is a $30 million project, with $20 - $25 million investment
expected in 2014.
On December 17, the Partnership entered into two separate agreements
with Antero Resources for firm transportation services on the Equitrans
transmission system. Each agreement will ultimately provide 100 BBtu per
day of firm transmission capacity on the transmission system for a
combined total of 200 BBtu per day. As part of the agreement, the
Partnership expects to spend approximately $55 million on two separate
transmission expansion projects in northern West Virginia. The
Partnership will spend $26 million on a west-side expansion that will
add 100 BBtu per day of transmission capacity and is expected to be in
full service by year-end 2014. The Partnership will spend $29 million on
an east-side expansion that will add 100 BBtu per day of transmission
capacity and is expected to be in full service by mid-year 2015.
Combined, the agreements begin with 75 BBtu per day of firm transmission
capacity commencing on April 1, 2014 and increase to a total of 200 BBtu
per day by mid-year 2015. The agreements are primarily fixed-fee, demand
based with a 10-year term from each projects full 100 BBtu per day
in-service dates. The Partnership expects to spend approximately $30
million on the two projects in 2014, with the remaining $25 million
spent in 2015.
Ongoing Maintenance
The Partnership forecasts ongoing maintenance capital expenditures of
approximately $17 - 18 million for 2014. Ongoing maintenance capital
expenditures are cash expenditures made to maintain, over the long term,
the Partnership’s operating capacity or operating income. Ongoing
maintenance capital expenditures include approximately $5 million of
reimbursable maintenance capital expenditures related to the bare steel
replacement program.
Funded Regulatory Compliance
The Partnership forecasts funded regulatory compliance capital
expenditures of approximately $12 million for 2014. Funded regulatory
compliance capital expenditures relate to discrete expenditures
necessary to comply with two specific regulatory compliance initiatives;
system segmentation and isolation, and valve pit remediation. In order
to fund these two initiatives, the Partnership retained $32 million from
its initial public offering (IPO). Funded regulatory compliance capital
expenditures do not impact the calculation of distributable cash flow
and are expected to be substantially complete by the end of 2014.
Liquidity:
As of November 30, 2013 the Partnership had zero debt outstanding and
$18 million of cash. The Partnership also has $350 million available
under its revolving credit facility. As part of the Sunrise Pipeline
acquisition in July 2013, the Partnership agreed to pay $110 million of
consideration to EQT upon a third-party transportation agreement
becoming effective. The third-party transportation agreement, which was
related to EQT Corporation's sale of its natural gas utility, became
effective on December 17, 2013. The consideration will be paid from
cash-on-hand, plus borrowings from the credit facility.
Year-end Earnings Information:
The Partnership intends to release full-year 2013 earnings and host a
live webcast for security analysts on February 13, 2014. The webcast
will be available at www.eqtmidstreampartners.com
and will begin at 11:30 a.m. ET.
NON-GAAP DISCLOSURES
Adjusted EBITDA and Distributable Cash Flow
As used in this news release, adjusted EBITDA means net income plus net
interest expense, depreciation and amortization expense, income tax
expense (if applicable), non-cash long-term compensation expense and
other non-cash adjustments (if applicable), less other income and lease
payments (if applicable). As used in this news release, distributable
cash flow means adjusted EBITDA less net cash interest, ongoing
maintenance capital expenditures and reimbursable maintenance capital
expenditures plus reimbursable maintenance capital expenditures expected
to be reimbursed by EQT. Distributable cash flow should not be viewed as
indicative of the actual amount of cash that the Partnership has
available for distributions from operating surplus or that the
Partnership plans to distribute. Adjusted EBITDA and distributable cash
flow are non-GAAP supplemental financial measures that management and
external users of the Partnership’s consolidated financial statements,
such as industry analysts, investors, lenders and rating agencies, use
to assess:
-
the Partnership’s operating performance as compared to other publicly
traded partnerships in the midstream energy industry, without regard
to historical cost basis or, in the case of adjusted EBITDA, financing
methods;
-
the ability of the Partnership’s assets to generate sufficient cash
flow to make distributions to the Partnership’s unitholders;
-
the Partnership’s ability to incur and service debt and fund capital
expenditures; and
-
the viability of acquisitions and other capital expenditure projects
and the returns on investment of various investment opportunities.
The Partnership believes that adjusted EBITDA and distributable cash
flow provide useful information to investors in assessing the
Partnership’s financial condition and results of operations. Adjusted
EBITDA and distributable cash flow should not be considered as
alternatives to net income, operating income, net cash provided by
operating activities or any other measure of financial performance or
liquidity presented in accordance with generally accepted accounting
principles (GAAP). Adjusted EBITDA and distributable cash flow have
important limitations as analytical tools because they exclude some, but
not all, items that affect net income and net cash provided by operating
activities. Additionally, because adjusted EBITDA and distributable cash
flow may be defined differently by other companies in its industry, the
Partnership’s definition of adjusted EBITDA and distributable cash flow
may not be comparable to similarly titled measures of other companies,
thereby diminishing their utility.
About EQT Midstream Partners:
EQT Midstream Partners, LP is a growth-oriented limited partnership
formed by EQT Corporation to own, operate, acquire and develop midstream
assets in the Appalachian basin. The Partnership provides midstream
services to EQT Corporation and third-party companies through two
primary assets: the Equitrans Transmission and Storage System and the
Equitrans Gathering System. The Partnership has a 700-mile
FERC-regulated interstate pipeline system and more than 1,700 miles of
FERC-regulated, low-pressure gathering lines.
Visit EQT Midstream Partners, LP at www.eqtmidstreampartners.com.
Cautionary Statements
The Partnership is unable to provide a reconciliation of its projected
adjusted EBITDA and projected distributable cash flow to projected net
income or projected net cash provided by operating activities, the most
comparable financial measures calculated in accordance with GAAP,
because of uncertainties associated with projecting future net income
and changes in assets and liabilities.
The Partnership’s CAPEX forecast does not include capital expenditures
for potential midstream infrastructure projects not committed at this
date.
Disclosures in this news release contain certain forward-looking
statements. Statements that do not relate strictly to historical or
current facts are forward-looking. Without limiting the generality of
the foregoing, forward-looking statements contained in this news release
specifically include the expectations of plans, strategies, objectives
and growth and anticipated financial and operational performance of the
Partnership and its subsidiaries, including guidance regarding the
Partnership’s projected adjusted EBITDA and projected distributable cash
flow; projected distributions per unit including quarterly increases;
capital expenditures, including the amount of capital expenditures to be
reimbursed by EQT; capital budget; project coverage ratio; the timing,
amount of, and funding sources for, any payments to EQT for any
third-party transportation agreements becoming effective related to the
Sunrise Pipeline acquisition; accretion from acquisitions; organic
transmission business growth; and infrastructure programs (including the
timing, cost, and transmission capacity resulting from such projects).
These statements involve risks and uncertainties that could cause actual
results to differ materially from projected results. Accordingly,
investors should not place undue reliance on forward-looking statements
as a prediction of actual results. The Partnership has based these
forward-looking statements on current expectations and assumptions about
future events. While the Partnership considers these expectations and
assumptions to be reasonable, they are inherently subject to significant
business, economic, competitive, regulatory and other risks and
uncertainties, most of which are difficult to predict and many of which
are beyond the Partnership's control. The risks and uncertainties that
may affect the operations, performance and results of the Partnership's
business and forward-looking statements include, but are not limited to,
those set forth under Item 1A, "Risk Factors" of the Partnership's Form
10-Q for the quarter ended September 30, 2013, as updated by any
subsequent filed 10-Qs. Any forward-looking statement speaks only as of
the date on which such statement is made and the Partnership does not
intend to correct or update any forward-looking statement, whether as a
result of new information, future events or otherwise.
Information in this news release regarding EQT Corporation and its
subsidiaries, other than the Partnership, is derived from publicly
available information published by EQT.
Copyright Business Wire 2013