EQT Corporation’s Midstream Transaction with EQT Midstream Partners, LP, EQT GP Holdings, LP and Rice Midstream Partners LP


Goldman Sachs & Co. LLC acted as financial advisor and Wachtell, Lipton, Rosen & Katz and Baker Botts L.L.P. acted as legal advisors to EQT. Evercore acted as financial advisor and Richards, Layton & Finger, P.A. acted as legal advisor to the Conflicts Committee of EQM. Jefferies LLC acted as financial advisor and Latham & Watkins LLP acted as legal advisor to the Conflicts Committee of RMP. Baird acted as financial advisor and Hunton Andrews Kurth LLP acted as legal advisor to the Conflicts Committee of EQGP.

EQM has entered into a definitive agreement with EQT to acquire its Olympus Gathering System and its 75% interest in the Strike Force Gathering System. EQM has also entered into a definitive agreement with Gulfport Energy to acquire its 25% interest in the Strike Force Gathering System. EQT will receive $1.15 billion in cash and 5.9 million EQM common units and Gulfport Energy will receive $175 million in cash. Additional details regarding the Olympus Gathering System and the Strike Force Gathering System (Ohio Gathering Assets), including an adjusted EBITDA forecast, are provided below. The acquisition is expected to close in the second quarter of 2018.

EQM and RMP have entered into a definitive merger agreement under which EQM will acquire RMP in a unit-for-unit transaction. Each holder of a common unit of RMP will receive 0.3319 units of EQM, representing a 10% premium to RMP and an equity value of $2.1 billion based on the closing RMP and EQM unit prices on April 25, 2018. EQM will also assume RMP debt, which totaled $325 million as of March 31, 2018. The transaction is expected to close in the third quarter of 2018, subject to customary closing conditions and the closing of the RMP IDRs purchase.

The merger of EQM and RMP creates significant operational efficiencies through the optimized buildout of gathering and header pipeline systems to service the combined EQT and legacy Rice Energy acreage footprint. The efficiency gains are expected to result in approximately $500 million of capital avoidance, while achieving the same level of gathered volume growth during the next five years. In addition to the capital synergies, EQM expects to realize savings of approximately $15 million per year in operating and maintenance expense and selling, general and administrative expense.

EQGP has entered into a definitive agreement with EQT to acquire its ownership of the RMP IDRs for 36.3 million EQGP common units, which represents $937 million based on the April 25, 2018 EQGP closing unit price. The transaction is expected to close in the second quarter of 2018. In the event that the EQM/RMP merger is not completed, 8.5 million EQGP common units that had been issued as consideration would be cancelled and EQT would pay EQGP the aggregate amount of any distributions received from EQGP related to the cancelled units in cash.

EQT Corporation is an integrated energy company with emphasis on Appalachian area natural-gas supply, transmission, and distribution. The Company, led by David L Porges, Robert Joseph McNally and

Donald Jenkins offers natural gas products to wholesale and retail customers. In 2017, EQT Corporation Recorded $3 Billion Revenues.

Baker Botts represented EQT Corporation with a team including Michael Bengtson (Picture, New York); Joshua Davidson (Partner, Houston); John Kaercher (Senior Associate, Austin); Rachel Ratcliffe (Associate, Austin); Leah Davis (Associate, Austin); Michael Bresson (Partner, Houston) and Jared Meier (Senior Associate, Houston).

Involved fees earner: Mike Bengtson – Baker Botts; Joshua Davidson – Baker Botts; John Kaercher – Baker Botts; Rachel Ratcliffe – Baker Botts; Leah Davis Patrick – Baker Botts; Michael Bresson – Baker Botts; Jared Meier – Baker Botts;

Law Firms: Baker Botts;

Clients: EQT Corporation LP;

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Author: Ambrogio Visconti