EQM Midstream Partners has wrapped up its previously announced $1.03bn acquisition of 60% stake in the Eureka Midstream pipeline system and 100% in the Hornet Midstream gathering system in the US.
Image: EQM acquired 60% stake in the Eureka Midstream pipeline system and 100% in Hornet Midstream gathering system. Photo: courtesy of outgunned21/Freeimages.com.
The stakes in the midstream assets were acquired by EQM from a fund managed by Morgan Stanley Infrastructure Partners.
Eureka Midstream, which serves dry Utica and wet Marcellus production, is a 305.7km long gas gathering header pipeline system laid between Ohio and West Virginia.
On the other hand, Hornet Midstream is a 24km, high-pressure gathering system in West Virginia that connects to the Eureka Midstream pipeline. The volume mix of the two assets is 67% dry gas and 33% wet gas.
As of the fourth quarter of 2018, the two midstream assets averaged about 1.6 Bcf/d gathered volume, and are underpinned by minimum volume commitments (MVCs) of 0.8 Bcf/d, which is expected to be increased to 1.3 Bcf/d by 2021.
The Eureka Midstream pipeline and the Hornet Midstream gathering system also have access to EQM system and downstream pipelines at Clarington in Ohio and Mobley in West Virginia.
According to EQM, the gathering system assets and complementary water services opportunities are expected to generate about $100m of EBITDA in the first twelve months. As per the company’s estimates, the acquired assets and associated water services will achieve over 20% annual EBITDA growth in the next several years.
As per the deal announced last month, EQM’s payment for the stakes in the midstream assets comprised of nearly $860m in cash and about $170m of assumed pro-rata debt.
EQM chief operating officer Diana Charletta said: “We are pleased to have completed this important acquisition and our team is excited to begin integrating the Eureka and Hornet systems and leveraging our existing assets and core operating capabilities.
“We are relentless in our pursuit of becoming the low-cost provider and partner of choice across all aspects of our business. These value-enhancing assets will diversify our producer customer mix and increase exposure to wet Marcellus acreage; expand our supply hub and create additional commercial opportunities; reduce unit operating costs through increased scale; and accelerate opportunities for our water services business.”
Earlier this year, EQM and its partners in the $4.6bn Mountain Valley Pipeline project, secured a favorable decision from the US Court of Appeals for the D.C. Circuit, which upheld the Federal Energy Regulatory Commission’s (FERC) approval of the interstate natural gas pipeline system.