(Mark One)
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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or
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER 001-35574
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DELAWARE
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37-1661577
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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625 Liberty Avenue, Suite 1700, Pittsburgh, Pennsylvania
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15222
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(Address of principal executive offices)
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(Zip code)
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(412) 553-5700
(Registrant’s telephone number, including area code)
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Large Accelerated Filer
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x
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Accelerated Filer
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¨
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Non-Accelerated Filer
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¨
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Smaller reporting company
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¨
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Page No.
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Three Months Ended
March 31, |
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2016
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2015
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(Thousands, except per unit amounts)
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||||||
Operating revenues
(2)
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$
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180,601
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$
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154,811
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Operating expenses:
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Operating and maintenance
(3)
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16,645
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14,479
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Selling, general and administrative
(3)
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16,292
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15,653
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Depreciation and amortization
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15,478
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11,927
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Total operating expenses
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48,415
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42,059
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Operating income
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132,186
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112,752
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Other income
(4)
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7,137
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714
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Interest expense
(5)
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10,258
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11,457
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Income before income taxes
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129,065
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102,009
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Income tax expense
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—
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6,703
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Net income
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$
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129,065
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$
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95,306
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Calculation of limited partners' interest in net income:
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Net income
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$
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129,065
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$
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95,306
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Less pre-acquisition net income allocated to parent
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—
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(11,106
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)
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Less general partner interest in net income – general partner units
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(2,355
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)
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(1,684
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)
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Less general partner interest in net income – incentive distribution rights
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(18,832
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)
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(8,045
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)
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Limited partners' interest in net income
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$
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107,878
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$
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74,471
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Net income per limited partner unit – basic
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$
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1.39
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$
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1.18
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Net income per limited partner unit – diluted
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$
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1.39
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$
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1.18
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Weighted average limited partner units outstanding – basic
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77,593
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63,211
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Weighted average limited partner units outstanding – diluted
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77,675
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63,379
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Cash distributions declared per unit
(6)
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$
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0.745
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$
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0.61
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(1)
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Financial statements for the
three months ended March 31, 2015
included the results of NWV Gathering for the entire period presented as a result of the NWV Gathering Acquisition on March 17, 2015. See Note B.
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(2)
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Operating revenues included affiliate revenues from EQT of
$131.4 million
and
$106.6 million
for the
three months ended March 31, 2016
and
2015
, respectively. See Note E.
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(3)
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Operating and maintenance expense included charges from EQT of
$8.0 million
and
$7.6 million
for the
three months ended March 31, 2016
and
2015
, respectively. Selling, general and administrative expense included charges from EQT of
$14.8 million
and
$12.8 million
for the
three months ended March 31, 2016
and
2015
, respectively. See Note E.
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(4)
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For the
three months ended March 31, 2016
, other income included distributions received from EES of
$2.8 million
and equity income from the MVP Joint Venture of
$1.6 million
. See Note F.
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(5)
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Interest expense included interest on a capital lease with an affiliate of
$5.4 million
and
$5.9 million
for the
three months ended March 31, 2016
and
2015
, respectively.
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(6)
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Represents the cash distributions declared related to the period presented. See Note J.
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Three Months Ended
March 31, |
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2016
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2015
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(Thousands)
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||||||
Cash flows from operating activities:
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Net income
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$
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129,065
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$
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95,306
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Adjustments to reconcile net income to net cash provided by operating activities:
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Depreciation and amortization
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15,478
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11,927
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Deferred income taxes
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—
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2,998
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Equity income
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(1,589
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)
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—
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AFUDC – equity
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(2,472
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)
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(714
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)
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Non-cash long-term compensation expense
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195
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566
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Changes in other assets and liabilities:
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Accounts receivable
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(593
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32
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Accounts payable
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(835
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(4,784
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)
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Due to/from EQT affiliates
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(15,959
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)
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12,623
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Other assets and other liabilities
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(5,036
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)
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(3,295
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)
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Net cash provided by operating activities
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118,254
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114,659
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Cash flows from investing activities:
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Capital expenditures
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(104,777
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(91,415
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)
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MVP Interest Acquisition and capital contributions to the MVP Joint Venture
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(11,430
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)
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(54,229
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)
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Sales of interests in the MVP Joint Venture
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12,533
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—
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Acquisitions – net assets from EQT
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—
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(386,791
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)
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Net cash used in investing activities
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(103,674
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(532,435
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Cash flows from financing activities:
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Proceeds from the issuance of EQM common units, net of offering costs
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—
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698,600
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Acquisitions – purchase price in excess of net assets from EQT
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—
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(486,392
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Proceeds from credit facility borrowings
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71,000
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390,000
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Payments of credit facility borrowings
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(361,000
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)
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(91,000
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)
|
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Distributions paid to unitholders
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(72,575
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(41,180
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)
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Capital contributions
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—
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33
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|
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Net distributions to EQT
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—
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(23,866
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)
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Capital lease principal payments
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(2,451
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)
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(4,477
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)
|
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Net cash (used in) provided by financing activities
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(365,026
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)
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441,718
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Net change in cash and cash equivalents
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(350,446
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)
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23,942
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Cash and cash equivalents at beginning of period
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350,814
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126,175
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Cash and cash equivalents at end of period
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$
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368
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$
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150,117
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|
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Cash paid during the period for:
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|
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Interest, net of amount capitalized
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$
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16,374
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$
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17,316
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|
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Non-cash activity during the period for
:
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Increase in capital lease asset/obligation
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$
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16,498
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$
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3,087
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Increase in MVP Joint Venture investment/payable for capital contributions (see Note F)
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13,864
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|
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—
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Elimination of net current and deferred tax liabilities
|
—
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|
84,446
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|
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Limited partner and general partner units issued for acquisitions
|
$
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—
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$
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52,500
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(1)
|
Financial statements for the
three months ended March 31, 2015
included the results of NWV Gathering for the entire period presented as a result of the NWV Gathering Acquisition on March 17, 2015. See Note B.
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March 31,
2016 |
|
December 31, 2015
|
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ASSETS
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(Thousands, except number of units)
|
||||||
Current assets:
|
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|
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Cash and cash equivalents
|
$
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368
|
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$
|
350,814
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Accounts receivable (net of allowance for doubtful accounts of $255 as of March 31, 2016 and $238 as of December 31, 2015)
|
17,724
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|
|
17,131
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|
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Accounts receivable – affiliate
|
81,000
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|
|
77,925
|
|
||
Other current assets
|
2,963
|
|
|
1,680
|
|
||
Total current assets
|
102,055
|
|
|
447,550
|
|
||
|
|
|
|
||||
Property, plant and equipment
|
2,362,196
|
|
|
2,228,967
|
|
||
Less: accumulated depreciation
|
(274,133
|
)
|
|
(258,974
|
)
|
||
Net property, plant and equipment
|
2,088,063
|
|
|
1,969,993
|
|
||
|
|
|
|
||||
Investments in unconsolidated entities
|
215,995
|
|
|
201,342
|
|
||
Other assets
|
14,452
|
|
|
14,950
|
|
||
Total assets
|
$
|
2,420,565
|
|
|
$
|
2,633,835
|
|
|
|
|
|
||||
LIABILITIES AND PARTNERS’ CAPITAL
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
46,094
|
|
|
$
|
35,868
|
|
Due to related party
|
20,367
|
|
|
33,413
|
|
||
Credit facility borrowings
|
9,000
|
|
|
299,000
|
|
||
Capital contribution payable to MVP Joint Venture
|
13,864
|
|
|
—
|
|
||
Accrued interest
|
3,339
|
|
|
8,753
|
|
||
Accrued liabilities
|
16,253
|
|
|
12,194
|
|
||
Total current liabilities
|
108,917
|
|
|
389,228
|
|
||
|
|
|
|
||||
Long-term debt
|
493,594
|
|
|
493,401
|
|
||
Lease obligation
|
184,765
|
|
|
175,660
|
|
||
Other long-term liabilities
|
8,730
|
|
|
7,834
|
|
||
Total liabilities
|
796,006
|
|
|
1,066,123
|
|
||
|
|
|
|
||||
Partners’ capital:
|
|
|
|
|
|
||
Common units (77,632,449 and 77,520,181 units issued and outstanding at March 31, 2016 and December 31, 2015, respectively)
|
1,651,868
|
|
|
1,598,675
|
|
||
General partner interest (1,443,015 units issued and outstanding at March 31, 2016 and December 31, 2015)
|
(27,309
|
)
|
|
(30,963
|
)
|
||
Total partners’ capital
|
1,624,559
|
|
|
1,567,712
|
|
||
Total liabilities and partners’ capital
|
$
|
2,420,565
|
|
|
$
|
2,633,835
|
|
|
|
|
Partners’ Capital
|
|
|
||||||||||||||
|
Predecessor
|
|
Limited Partners
|
|
General
|
|
|
||||||||||||
|
Equity
|
|
Common
|
|
Subordinated
|
|
Partner
|
|
Total
|
||||||||||
|
(Thousands)
|
||||||||||||||||||
Balance at January 1, 2015
|
$
|
315,105
|
|
|
$
|
1,647,910
|
|
|
$
|
(929,374
|
)
|
|
$
|
(27,497
|
)
|
|
$
|
1,006,144
|
|
Net income
|
11,106
|
|
|
74,471
|
|
|
—
|
|
|
9,729
|
|
|
95,306
|
|
|||||
Capital contributions
|
—
|
|
|
209
|
|
|
—
|
|
|
4
|
|
|
213
|
|
|||||
Equity-based compensation plans
|
—
|
|
|
571
|
|
|
—
|
|
|
33
|
|
|
604
|
|
|||||
Distributions to unitholders
|
—
|
|
|
(25,142
|
)
|
|
(10,057
|
)
|
|
(5,981
|
)
|
|
(41,180
|
)
|
|||||
Conversion of subordinated units to common units
(2)
|
—
|
|
|
(939,431
|
)
|
|
939,431
|
|
|
—
|
|
|
—
|
|
|||||
Net distributions to EQT
|
(23,866
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,866
|
)
|
|||||
Proceeds from issuance of common units, net of offering costs
|
—
|
|
|
696,681
|
|
|
—
|
|
|
1,919
|
|
|
698,600
|
|
|||||
Elimination of net current and deferred tax liabilities
|
84,446
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
84,446
|
|
|||||
NWV Gathering net assets from EQT
|
(386,791
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(386,791
|
)
|
|||||
Issuance of units
|
—
|
|
|
38,910
|
|
|
—
|
|
|
13,590
|
|
|
52,500
|
|
|||||
Purchase price in excess of net assets from EQT
|
—
|
|
|
(505,452
|
)
|
|
—
|
|
|
(33,440
|
)
|
|
(538,892
|
)
|
|||||
Balance at March 31, 2015
|
$
|
—
|
|
|
$
|
988,727
|
|
|
$
|
—
|
|
|
$
|
(41,643
|
)
|
|
$
|
947,084
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at January 1, 2016
|
$
|
—
|
|
|
$
|
1,598,675
|
|
|
$
|
—
|
|
|
$
|
(30,963
|
)
|
|
$
|
1,567,712
|
|
Net income
|
—
|
|
|
107,878
|
|
|
—
|
|
|
21,187
|
|
|
129,065
|
|
|||||
Capital contributions
|
—
|
|
|
159
|
|
|
—
|
|
|
3
|
|
|
162
|
|
|||||
Equity-based compensation plans
|
—
|
|
|
195
|
|
|
—
|
|
|
—
|
|
|
195
|
|
|||||
Distributions to unitholders
|
—
|
|
|
(55,039
|
)
|
|
—
|
|
|
(17,536
|
)
|
|
(72,575
|
)
|
|||||
Balance at March 31, 2016
|
$
|
—
|
|
|
$
|
1,651,868
|
|
|
$
|
—
|
|
|
$
|
(27,309
|
)
|
|
$
|
1,624,559
|
|
(1)
|
Financial statements for the
three months ended March 31, 2015
included the results of NWV Gathering for the entire period presented as a result of the NWV Gathering Acquisition on March 17, 2015. See Note B.
|
(2)
|
All subordinated units were converted to common units on a
one
-for-one basis on February 17, 2015. For purposes of calculating net income per common and subordinated unit, the conversion of the subordinated units is deemed to have occurred on January 1, 2015.
|
A.
|
Financial Statements
|
B.
|
Acquisitions
|
C.
|
Partners' Capital and Net Income per Limited Partner Unit
|
|
Limited Partner Units
|
|
General
|
|
|
||||||
|
Common
|
|
Subordinated
|
|
Partner Units
|
|
Total
|
||||
Balance at January 1, 2015
|
43,347,452
|
|
|
17,339,718
|
|
|
1,238,514
|
|
|
61,925,684
|
|
Conversion of subordinated units to common units
|
17,339,718
|
|
|
(17,339,718
|
)
|
|
—
|
|
|
—
|
|
2014 EQM VDA issuance
|
21,063
|
|
|
—
|
|
|
430
|
|
|
21,493
|
|
March 2015 equity offering
|
9,487,500
|
|
|
—
|
|
|
25,255
|
|
|
9,512,755
|
|
NWV Gathering Acquisition consideration
|
511,973
|
|
|
—
|
|
|
178,816
|
|
|
690,789
|
|
$750 million "At the Market" (ATM) Program
|
1,162,475
|
|
|
—
|
|
|
—
|
|
|
1,162,475
|
|
November 2015 equity offering
|
5,650,000
|
|
|
—
|
|
|
—
|
|
|
5,650,000
|
|
Balance at December 31, 2015
|
77,520,181
|
|
|
—
|
|
|
1,443,015
|
|
|
78,963,196
|
|
2014 EQM VDA issuance
|
19,796
|
|
|
—
|
|
|
—
|
|
|
19,796
|
|
EQM Total Return Program issuance
|
92,472
|
|
|
—
|
|
|
—
|
|
|
92,472
|
|
Balance at March 31, 2016
|
77,632,449
|
|
|
—
|
|
|
1,443,015
|
|
|
79,075,464
|
|
D.
|
Financial Information by Business Segment
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(Thousands)
|
||||||
Revenues from external customers (including affiliates):
|
|
|
|
|
|
||
Gathering
|
$
|
93,316
|
|
|
$
|
75,450
|
|
Transmission and storage
|
87,285
|
|
|
79,361
|
|
||
Total
|
$
|
180,601
|
|
|
$
|
154,811
|
|
|
|
|
|
||||
Operating income:
|
|
|
|
|
|
||
Gathering
|
$
|
70,055
|
|
|
$
|
55,462
|
|
Transmission and storage
|
62,131
|
|
|
57,290
|
|
||
Total operating income
|
$
|
132,186
|
|
|
$
|
112,752
|
|
|
|
|
|
||||
Reconciliation of operating income to net income:
|
|
|
|
|
|||
Other income
|
7,137
|
|
|
714
|
|
||
Interest expense
|
10,258
|
|
|
11,457
|
|
||
Income tax expense
|
—
|
|
|
6,703
|
|
||
Net income
|
$
|
129,065
|
|
|
$
|
95,306
|
|
|
March 31, 2016
|
|
December 31, 2015
|
||||
|
(Thousands)
|
||||||
Segment assets:
|
|
|
|
|
|
||
Gathering
|
$
|
1,028,169
|
|
|
$
|
963,877
|
|
Transmission and storage
|
1,168,248
|
|
|
1,110,027
|
|
||
Total operating segments
|
2,196,417
|
|
|
2,073,904
|
|
||
Headquarters, including cash
|
224,148
|
|
|
559,931
|
|
||
Total assets
|
$
|
2,420,565
|
|
|
$
|
2,633,835
|
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(Thousands)
|
||||||
Depreciation and amortization:
|
|
|
|
|
|
||
Gathering
|
$
|
6,769
|
|
|
$
|
5,159
|
|
Transmission and storage
|
8,709
|
|
|
6,768
|
|
||
Total
|
$
|
15,478
|
|
|
$
|
11,927
|
|
|
|
|
|
||||
Expenditures for segment assets:
|
|
|
|
||||
Gathering
|
$
|
69,431
|
|
|
$
|
36,269
|
|
Transmission and storage
|
46,407
|
|
|
21,462
|
|
||
Total
(1)
|
$
|
115,838
|
|
|
$
|
57,731
|
|
(1)
|
EQM accrues capital expenditures when work has been completed but the associated bills have not yet been paid. These accrued amounts are excluded from capital expenditures on the statements of consolidated cash flows until they are paid in a subsequent period. Accrued capital expenditures were approximately
$29.4 million
and
$17.4 million
at
March 31, 2016
and
2015
, respectively.
|
E.
|
Related Party Transactions
|
F.
|
Investments in Unconsolidated Entities
|
G.
|
Credit Facility Borrowings
|
H.
|
Fair Value Measurements
|
I.
|
Income Taxes
|
J.
|
Distributions
|
|
Three Months Ended March 31,
|
|||||||||
|
2016
|
|
2015
|
|
% Change
|
|||||
FINANCIAL DATA
|
(Thousands, other than per day amounts)
|
|||||||||
Firm reservation fee revenues
|
$
|
79,182
|
|
|
$
|
54,258
|
|
|
45.9
|
|
Volumetric based fee revenues:
|
|
|
|
|
|
|||||
Usage fees under firm contracts
(1)
|
10,467
|
|
|
9,432
|
|
|
11.0
|
|
||
Usage fees under interruptible contracts
|
3,667
|
|
|
11,760
|
|
|
(68.8
|
)
|
||
Total volumetric based fee revenues
|
14,134
|
|
|
21,192
|
|
|
(33.3
|
)
|
||
Total operating revenues
|
93,316
|
|
|
75,450
|
|
|
23.7
|
|
||
Operating expenses:
|
|
|
|
|
|
|||||
Operating and maintenance
|
8,478
|
|
|
7,223
|
|
|
17.4
|
|
||
Selling, general and administrative
|
8,014
|
|
|
7,606
|
|
|
5.4
|
|
||
Depreciation and amortization
|
6,769
|
|
|
5,159
|
|
|
31.2
|
|
||
Total operating expenses
|
23,261
|
|
|
19,988
|
|
|
16.4
|
|
||
Operating income
|
$
|
70,055
|
|
|
$
|
55,462
|
|
|
26.3
|
|
|
|
|
|
|
|
|||||
OPERATIONAL DATA
|
|
|
|
|
|
|
|
|
||
Gathering volumes (BBtu per day)
|
|
|
|
|
|
|||||
Firm reservation
|
1,380
|
|
|
1,046
|
|
|
31.9
|
|
||
Volumetric based services
(2)
|
384
|
|
|
441
|
|
|
(12.9
|
)
|
||
Total gathered volumes
|
1,764
|
|
|
1,487
|
|
|
18.6
|
|
||
|
|
|
|
|
|
|||||
Capital expenditures
|
$
|
69,431
|
|
|
$
|
36,269
|
|
|
91.4
|
|
(1)
|
Includes fees on volumes gathered in excess of firm contracted capacity.
|
(2)
|
Includes volumes gathered under interruptible contracts and volumes in excess of firm contracted capacity.
|
|
Three Months Ended March 31,
|
|||||||||
|
2016
|
|
2015
|
|
% Change
|
|||||
FINANCIAL DATA
|
(Thousands, other than per day amounts)
|
|||||||||
Firm reservation fee revenues
|
$
|
70,109
|
|
|
$
|
68,183
|
|
|
2.8
|
|
Volumetric based fee revenues:
|
|
|
|
|
|
|||||
Usage fees under firm contracts
(1)
|
13,429
|
|
|
8,933
|
|
|
50.3
|
|
||
Usage fees under interruptible contracts
|
3,747
|
|
|
2,245
|
|
|
66.9
|
|
||
Total volumetric based fee revenues
|
17,176
|
|
|
11,178
|
|
|
53.7
|
|
||
Total operating revenues
|
87,285
|
|
|
79,361
|
|
|
10.0
|
|
||
Operating expenses:
|
|
|
|
|
|
|||||
Operating and maintenance
|
8,167
|
|
|
7,256
|
|
|
12.6
|
|
||
Selling, general and administrative
|
8,278
|
|
|
8,047
|
|
|
2.9
|
|
||
Depreciation and amortization
|
8,709
|
|
|
6,768
|
|
|
28.7
|
|
||
Total operating expenses
|
25,154
|
|
|
22,071
|
|
|
14.0
|
|
||
Operating income
|
$
|
62,131
|
|
|
$
|
57,290
|
|
|
8.4
|
|
|
|
|
|
|
|
|||||
OPERATIONAL DATA
|
|
|
|
|
|
|
|
|
||
Transmission pipeline throughput (BBtu per day)
|
|
|
|
|
|
|||||
Firm capacity reservation
|
1,622
|
|
|
2,025
|
|
|
(19.9
|
)
|
||
Volumetric based services
(2)
|
487
|
|
|
213
|
|
|
128.6
|
|
||
Total transmission pipeline throughput
|
2,109
|
|
|
2,238
|
|
|
(5.8
|
)
|
||
|
|
|
|
|
|
|||||
Average contracted firm transmission reservation commitments (BBtu per day)
|
3,005
|
|
|
2,947
|
|
|
2.0
|
|
||
|
|
|
|
|
|
|||||
Capital expenditures
|
$
|
46,407
|
|
|
$
|
21,462
|
|
|
116.2
|
|
(1)
|
Includes commodity charges and fees on volumes transported in excess of firm contracted capacity.
|
(2)
|
Includes volumes transported under interruptible contracts and volumes in excess of firm contracted capacity.
|
•
|
EQM’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 EQM’s assets to generate sufficient cash flow to make distributions to EQM’s unitholders;
|
•
|
EQM’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.
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(Thousands)
|
||||||
Net income
|
$
|
129,065
|
|
|
$
|
95,306
|
|
Add:
|
|
|
|
||||
Interest expense
|
10,258
|
|
|
11,457
|
|
||
Depreciation and amortization expense
|
15,478
|
|
|
11,927
|
|
||
Income tax expense
|
—
|
|
|
6,703
|
|
||
Non-cash long-term compensation expense
|
195
|
|
|
566
|
|
||
Less:
|
|
|
|
||||
Equity income
|
(1,589
|
)
|
|
—
|
|
||
AFUDC – equity
|
(2,472
|
)
|
|
(714
|
)
|
||
Capital lease payments for AVC
(1)
|
(9,364
|
)
|
|
(8,844
|
)
|
||
Adjusted EBITDA attributable to NWV Gathering prior to acquisition
(2)
|
—
|
|
|
(19,841
|
)
|
||
Adjusted EBITDA
|
$
|
141,571
|
|
|
$
|
96,560
|
|
Less:
|
|
|
|
||||
Interest expense excluding capital lease interest
|
(4,857
|
)
|
|
(5,532
|
)
|
||
Capitalized interest and AFUDC - debt
(3)
|
(1,430
|
)
|
|
—
|
|
||
Ongoing maintenance capital expenditures net of expected reimbursements
(4)
|
(1,969
|
)
|
|
(1,047
|
)
|
||
Distributable cash flow
|
$
|
133,315
|
|
|
$
|
89,981
|
|
|
|
|
|
||||
Net cash provided by operating activities
|
$
|
118,254
|
|
|
$
|
114,659
|
|
Adjustments:
|
|
|
|
||||
Interest expense
|
10,258
|
|
|
11,457
|
|
||
Current tax expense
|
—
|
|
|
3,705
|
|
||
Capital lease payments for AVC
(1)
|
(9,364
|
)
|
|
(8,844
|
)
|
||
Adjusted EBITDA attributable to NWV Gathering prior to acquisition
(2)
|
—
|
|
|
(19,841
|
)
|
||
Other, including changes in working capital
|
22,423
|
|
|
(4,576
|
)
|
||
Adjusted EBITDA
|
$
|
141,571
|
|
|
$
|
96,560
|
|
(1)
|
Reflects capital lease payments due under the lease. These lease payments are generally made monthly on a one month lag.
|
(2)
|
Adjusted EBITDA attributable to NWV Gathering prior to acquisition for the periods presented was excluded from EQM’s adjusted EBITDA calculations as these amounts were generated by NWV Gathering prior to EQM’s acquisition; therefore, they were not amounts that could have been distributed to EQM’s unitholders. Adjusted EBITDA attributable to NWV Gathering for the three months ended March 31, 2015 was calculated as net income of
$11.1 million
plus depreciation and amortization expense of
$2.0 million
plus income tax expense of
$6.7 million
.
|
(3)
|
Capitalized interest and AFUDC - debt was added as an adjustment to the calculation of distributable cash flow during the
three months ended March 31, 2016
. The impact for the
three months ended March 31, 2015
of $0.5 million is immaterial.
|
(4)
|
Ongoing maintenance capital expenditures, net of expected reimbursements excludes ongoing maintenance that EQM expects to be reimbursed or that was reimbursed by EQT under the terms of EQM's omnibus agreement of $
0.2 million
for each of the
three months ended March 31, 2016
and
2015
, respectively. Additionally, it excludes ongoing maintenance attributable to NWV Gathering prior to acquisition of
$0.3 million
for the three months ended March 31,
2015
.
|
•
|
Ohio Valley Connector
. The OVC is a 37-mile pipeline that will extend EQM's transmission and storage system from northern West Virginia to Clarington, Ohio, at which point it will interconnect with the Rockies Express Pipeline and may interconnect with other pipelines and liquidity points. The OVC will provide approximately 850 BBtu per day of transmission capacity with an aggregate compression of approximately 38,000 horsepower and is estimated to cost $350 million to $380 million, of which $210 million to $220 million is expected to be spent in 2016. EQT has entered into a 20-year transportation service agreement with EQM for a total of 650 BBtu per day of firm transmission capacity on the OVC. EQM received its FERC certificate to construct and operate the OVC on December 30, 2015 and construction began in January 2016. EQM expects the OVC to be in-service by year-end 2016.
|
•
|
Range Resources Header Pipeline Project
. EQM is constructing a natural gas header pipeline for a subsidiary of Range Resources Corporation (Range Resources) in southwestern Pennsylvania to support Marcellus and Utica development. The pipeline is expected to cost approximately $250 million and is contracted to provide 600 MMcf per day of firm capacity backed by a ten-year firm capacity reservation commitment. EQM plans to complete the project in two phases, with phase one expected to be in-service during the second half of 2016 and phase two during the first half of 2017. EQM expects to invest approximately $195 million to $205 million on the project in 2016.
|
•
|
NWV Gathering and Jupiter Development Areas
. EQM expects to invest a total of approximately $370 million, of which approximately $95 million to $105 million is expected to be spent during 2016, related to expansion in the NWV Gathering development area. These expenditures are part of a fully subscribed expansion project expected to raise total firm gathering capacity in the NWV Gathering development area to 640 MMcf per day by mid-year 2017. EQM also plans to invest approximately $20 million in the Jupiter development area to install a gathering pipeline that will extend the gathering system to include additional EQT Production development areas in Greene County, Pennsylvania.
|
•
|
Transmission Expansion Projects
. EQM is evaluating several multi-year transmission capacity expansion projects to support production growth in the Marcellus and Utica Shales that could total an additional 1.5 Bcf per day of capacity by year-end 2018. The projects may include additional compression, pipeline looping and new header pipelines. EQM expects to spend approximately $25 million on these expansion projects during 2016.
|
•
|
Mountain Valley Pipeline
. The MVP Joint Venture is a joint venture with affiliates of each of NextEra Energy, Inc., Consolidated Edison, Inc., WGL Holdings, Inc.,Vega Energy Partners, Ltd. and RGC Resources, Inc. EQM is the operator of the MVP and owned a
45.5%
interest in the MVP Joint Venture as of
April 28, 2016
. The estimated
300
-mile MVP is currently targeted at 42 inches in diameter and a capacity of 2.0 Bcf per day and will extend from EQM's existing transmission and storage system in Wetzel County, West Virginia to Pittsylvania County, Virginia. As currently designed, the MVP is estimated to cost a total of $3.0 billion to $3.5 billion, excluding AFUDC, with EQM funding its proportionate share through capital contributions made to the joint venture. In 2016, EQM expects to provide capital contributions of approximately $150 million to the MVP Joint Venture, primarily in support of material orders, environmental and land assessments and engineering design work. Expenditures are expected to increase substantially as construction commences, with the bulk of the expenditures expected to be made in 2017 and 2018.
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(Thousands)
|
||||||
Expansion capital expenditures
(1)
|
$
|
113,532
|
|
|
$
|
55,494
|
|
Maintenance capital expenditures:
|
|
|
|
||||
Ongoing maintenance
|
2,131
|
|
|
1,597
|
|
||
Funded regulatory compliance
|
175
|
|
|
640
|
|
||
Total maintenance capital expenditures
|
2,306
|
|
|
2,237
|
|
||
Total capital expenditures
(2)
|
$
|
115,838
|
|
|
$
|
57,731
|
|
(1)
|
Expansion capital expenditures do not include capital contributions made to the MVP Joint Venture. During the first quarter of 2016, capital contributions to the MVP Joint Venture were
$11.4 million
. In the first quarter of 2015, EQM paid approximately
$54.2 million
for its acquisition of EQT's ownership interest in the MVP Joint Venture as described in Note B.
|
(2)
|
EQM accrues capital expenditures when work has been completed but the associated bills have not yet been paid. These accrued amounts are excluded from capital expenditures on the statements of consolidated cash flows until they are paid in a subsequent period. Accrued capital expenditures were approximately
$29.4 million
and
$17.4 million
at
March 31, 2016
and
2015
, respectively.
|
Rating Service
|
|
Senior Notes
|
|
Outlook
|
Moody’s Investors Service (Moody's)
|
|
Ba1
|
|
Stable
|
Standard & Poor’s Ratings Services (S&P)
|
|
BBB-
|
|
Stable
|
Fitch Ratings (Fitch)
|
|
BBB-
|
|
Stable
|
10.1
|
|
First Amendment to Second Amended and Restated Limited Liability Company Agreement of Mountain Valley Pipeline, LLC, dated as of January 21, 2016, by and among MVP Holdco, LLC, US Marcellus Gas Infrastructure, LLC and Mountain Valley Pipeline, LLC. Specific items in this exhibit have been redacted, as marked by three asterisks [***], because confidential treatment for those items has been requested from the SEC. The redacted material has been separately filed with the SEC.
|
10.2
|
|
Exhibit A to the Second Amended and Restated Limited Liability Company Agreement of Mountain Valley Pipeline, LLC, dated as of March 10, 2015, by and among MVP Holdco, LLC, US Marcellus Gas Infrastructure, LLC, Con Edison Gas Midstream, LLC, WGL Midstream, Inc., Vega Midstream MVP LLC, VED NPI IV, LLC, RGC Midstream, LLC and Mountain Valley Pipeline, LLC (as amended effective as of January 21, 2016).
|
31.1
|
|
Rule 13(a)-14(a) Certification of Principal Executive Officer.
|
31.2
|
|
Rule 13(a)-14(a) Certification of Principal Financial Officer.
|
32
|
|
Section 1350 Certification of Principal Executive Officer and Principal Financial Officer.
|
101
|
|
Interactive Data File.
|
|
EQT Midstream Partners, LP
|
||
|
(Registrant)
|
||
|
|
|
|
|
By:
|
EQT Midstream Services, LLC, its General Partner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Robert J. McNally
|
|
|
|
Robert J. McNally
|
|
|
|
Senior Vice President and Chief Financial Officer
|
Exhibit No.
|
|
Document Description
|
|
Method of Filing
|
|
10.1
|
|
|
First Amendment to Second Amended and Restated Limited Liability Company Agreement of Mountain Valley Pipeline, LLC, dated as of January 21, 2016, by and among MVP Holdco, LLC, US Marcellus Gas Infrastructure, LLC and Mountain Valley Pipeline, LLC. Specific items in this exhibit have been redacted, as marked by three asterisks [***], because confidential treatment for those items has been requested from the SEC. The redacted material has been separately filed with the SEC.
|
|
Filed herewith as Exhibit 10.1.
|
10.2
|
|
|
Exhibit A to the Second Amended and Restated Limited Liability Company Agreement of Mountain Valley Pipeline, LLC, dated as of March 10, 2015, by and among MVP Holdco, LLC, US Marcellus Gas Infrastructure, LLC, Con Edison Gas Midstream, LLC, WGL Midstream, Inc., Vega Midstream MVP LLC, VED NPI IV, LLC, RGC Midstream, LLC and Mountain Valley Pipeline, LLC (as amended effective as of January 21, 2016).
|
|
Filed herewith as Exhibit 10.2.
|
31.1
|
|
|
Rule 13(a)-14(a) Certification of Principal Executive Officer.
|
|
Filed herewith as Exhibit 31.1.
|
31.2
|
|
|
Rule 13(a)-14(a) Certification of Principal Financial Officer.
|
|
Filed herewith as Exhibit 31.2.
|
32
|
|
|
Section 1350 Certification of Principal Executive Officer and Principal Financial Officer.
|
|
Furnished herewith as Exhibit 32.
|
101
|
|
|
Interactive Data File.
|
|
Filed herewith as Exhibit 101.
|
Name, Address, Fax and E-mail
|
Sharing
Ratio
|
Parent
|
Representative and Alternate Representatives
|
MVP HOLDCO, LLC
EQT Plaza
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222
Fax: (412) 553-7781
Attention: Blue Jenkins
[***]
David Gray
[***]
Sean McGinty
[***]
with a copy to:
Baker Botts L.L.P.
98 San Jacinto Blvd., Suite 1500
Austin, Texas 78701
Fax: (512) 322-8349
Attn: Michael L. Bengtson
[***]
|
45.5%
|
EQT Midstream Partners, LP
|
David Gray – Representative
Blue Jenkins – Alternate Representative
|
US MARCELLUS GAS INFRASTRUCTURE, LLC
601 Travis Street
Suite 1900
Houston, Texas 77002
Fax: 713.751.0375
Attention: Lawrence A. Wall, Jr.
[***]
Karina Amelang
[***]
|
31%
|
NextEra Energy Capital Holdings, Inc.
|
TJ Tuscai, Chief Executive Officer – Representative
Lawrence A. Wall, Jr., President – Alternate Representative
|
WGL MIDSTREAM, INC.
c/o WGL Holdings, Inc.
101 Constitution Avenue, N.W.
Washington, DC 20080
Fax: (202) 624-6655
Attn: Anthony M. Nee
[***]
|
7%
|
WGL Holdings, Inc.
|
N/A
|
VEGA MIDSTREAM MVP LLC
c/o Vega Energy Partners, Ltd.
3701 Kirby Dr., Suite 1290
Houston, Texas 77098
Fax: (713) 527-0850
Attn: David A. Modesett
[***]
with a copy to:
Norton Rose Fulbright
1301 McKinney St., Suite 5100
Houston, TX 77010
Fax: (713) 651-5246
Attn: Ned Crady
[***]
|
3%
|
Vega Energy Partners, Ltd.
|
N/A
|
VEGA NPI IV, LLC
c/o Vega Energy Partners, Ltd.
3701 Kirby Dr., Suite 1290
Houston, Texas 77098
Fax: (713) 527-0850
Attn: David A. Modesett
[***]
with a copy to:
Norton Rose Fulbright
1301 McKinney St., Suite 5100
Houston, TX 77010
Fax: (713) 651-5246
Attn: Ned Crady
[***]
|
0%
|
Vega Energy Partners, Ltd.
|
N/A
|
RGC MIDSTREAM, LLC
519 Kimball Ave NE
Roanoke, Virginia 24016
Fax: (540) 777-2636
Attn: Paul Nester
[***]
|
1%
|
RGC Resources, Inc.
|
N/A
|
CON EDISON GAS MIDSTREAM, LLC
4 Irving Place
New York, New York 10003
Fax: (917) 534-4476
Attn: Joseph Oates
[***]
|
12.5%
|
Consolidated Edison, Inc.
|
N/A
|
(1)
|
such [***] shall [***]; and
|
(2)
|
the Company shall [***].
|
|
|
|||||||
|
Mountain Valley Pipeline, LLC
|
|||||||
|
|
|||||||
|
By: MVP Holdco, LLC,
its Member
|
|||||||
|
By:
|
/s/ Randall L. Crawford
|
||||||
|
|
Name: Randall L. Crawford
|
|
|
|
|||
|
|
Title: President
|
|
|
|
|||
|
By: US Marcellus Gas Infrastructure, LLC,
its Member
|
|||||||
|
|
|||||||
|
By:
|
/s/ Matthew Schafer
|
||||||
|
|
Name: Matthew Schafer
|
|
|
|
|
||
|
|
Title: Vice President
|
|
|
|
|
||
|
|
|||||||
|
|
|
||||||
|
MVP HOLDCO, LLC
By:
/s/ Randall L. Crawford
Name: Randall L. Crawford
Title: President
|
|
|
|||||
|
US MARCELLUS GAS
INFRASTRUCTURE, LLC
By:
/s/ Matthew Schafer
Name: Matthew Schafer
Title: Vice President
|
|
|
|
EQT Midstream Partners, LP
|
|
|
|
/s/ David L. Porges
|
|
David L. Porges
|
|
Chairman, President and Chief Executive Officer, EQT Midstream Services, LLC, the registrant’s General Partner
|
|
EQT Midstream Partners, LP
|
|
|
|
/s/ Robert J. McNally
|
|
Robert J. McNally
|
|
Senior Vice President and Chief Financial Officer, EQT Midstream Services, LLC, the registrant’s General Partner
|
/s/ David L. Porges
|
|
|
April 28, 2016
|
David L. Porges
President and Chief Executive Officer, EQT Midstream Services, LLC, EQM’s General Partner
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Robert J. McNally
|
|
|
April 28, 2016
|
Robert J. McNally
Senior Vice President and Chief Financial Officer, EQT Midstream Services, LLC, EQM’s General Partner
|
|
|