[X]
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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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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DELAWARE
(State or other jurisdiction of incorporation or organization)
625 Liberty Avenue, Suite 2000
Pittsburgh, Pennsylvania
(Address of principal executive offices)
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37-1661577
(IRS Employer Identification No.)
15222
(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Units Representing Limited Partner Interests
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New York Stock Exchange
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Large Accelerated Filer
x
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Accelerated Filer
¨
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Emerging Growth Company
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Non-Accelerated Filer
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(Do not check if a
smaller reporting company)
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Smaller Reporting Company
¨
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PART I
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Item 1
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Item 1A
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Item 1B
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Item 2
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Item 3
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Item 4
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PART II
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Item 5
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Item 6
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Item 7
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Item 7A
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Item 8
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Item 9
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Item 9A
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Item 9B
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PART III
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Item 10
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Item 11
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Item 12
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Item 13
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Item 14
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PART IV
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Item 15
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Abbreviations
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ARO
– asset retirement obligations
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ASU
– Accounting Standards Update
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ATM
– At the Market
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CERCLA
– Comprehensive Environmental Response, Compensation and Liability Act
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DOT
– U.S. Department of Transportation
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EPA
- U.S. Environmental Protection Agency
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FASB
–
Financial Accounting Standards Board
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FERC
– U.S. Federal Energy Regulatory Commission
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GAAP
– U.S. Generally Accepted Accounting Principles
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GHG
– greenhouse gas
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IDRs
– incentive distribution rights
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IPO
– initial public offering
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IRS
– Internal Revenue Service
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NAAQS
– National Ambient Air Quality Standards
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NGA
–
Natural Gas Act of 1938
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NGPA
– Natural Gas Policy Act of 1978
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NYMEX
– New York Mercantile Exchange
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NYSE
– New York Stock Exchange
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PHMSA
– Pipeline and Hazardous Materials Safety Administration of the DOT
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RCRA
–
Resource Conservation and Recovery Act
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SEC
– U.S. Securities and Exchange Commission
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Measurements
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Btu
= one British thermal unit
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BBtu
= billion British thermal units
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Bcf
= billion cubic feet
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Mcf
= thousand cubic feet
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MMBtu
= million British thermal units
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MMcf
= million cubic feet
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MMgal
= million gallons
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•
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Average daily gathering throughput volumes increased
145.6%
from
2,642
Btu per day (BBtu/d) for the year ended
December 31, 2017
to
6,489
BBtu/d for the year ended
December 31, 2018
due largely to the acquisitions described below.
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EQM-RMP Merger
. On April 25, 2018, EQM, RMP and certain of their affiliates executed an agreement and plan of merger, pursuant to which EQM agreed to acquire RMP and the RMP General Partner. The EQM-RMP Merger closed on July 23, 2018. RMP's natural gas gathering system includes approximately 180 miles of natural gas gathering pipelines with gathering capacity of 5.1 TBtu/d and compression capacity of approximately 85,000 horsepower. In addition, RMP's water services assets consist of approximately 140 miles of water pipelines, impoundment facilities, pumping stations, take point facilities and measurement facilities in Washington and Greene Counties, Pennsylvania, and Belmont County, Ohio. See Note
2
to the consolidated financial statements for further information.
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The Gulfport Transaction
. On May 1, 2018, EQM acquired the remaining 25% of the outstanding limited liability company interests in Strike Force Midstream LLC (Strike Force Midstream) that it did not then own from Gulfport Midstream Holdings, LLC (Gulfport Midstream), an affiliate of Gulfport Energy Corporation, for $175 million in cash (the Gulfport Transaction). Strike Force Midstream is a Delaware limited liability company that owns and operates a natural gas gathering system consisting of approximately 67 miles of natural gas gathering pipelines and compressor stations.
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Drop-Down Transaction.
On May 22, 2018 and effective May 1, 2018, EQM, through its wholly owned subsidiary EQM Gathering Holdings, LLC (EQM Gathering), acquired from EQT all of the outstanding limited liability company interests in each of EQM Olympus, EQM WV and Strike Force pursuant to the terms of the Contribution and Sale Agreement (the Contribution Agreement). EQM Olympus' natural gas gathering system includes approximately 85 miles of natural gas gathering pipelines and compressor stations that transport gas from wells located primarily in Belmont County, Ohio. EQM WV assets include approximately 31 miles of right-of-way assets in northern West Virginia. See Note
2
to the consolidated financial statements for further information.
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Senior Notes Offering.
During the second quarter of 2018, EQM issued 4.75% senior notes due July 15, 2023 in the aggregate principal amount of $1.1 billion, 5.50% senior notes due July 15, 2028 in the aggregate principal amount of $850 million and 6.50% senior notes due July 15, 2048 in the aggregate principal amount of $550 million (collectively, the 2018 Senior Notes). The net proceeds were used to repay the balances outstanding under the EQM Term Loan Facility and the RMP $850 Million Facility, and the remainder was used for general partnership purposes. See Note
10
for further information.
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Amendment to EQM's credit facility
. On October 31, 2018, EQM amended and restated its $1 billion credit facility to increase the borrowing capacity under the credit facility from $1 billion to $3 billion and extend the maturity date to October 2023. See Note
10
for further information.
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The Separation.
On November 12, 2018, EQT effected the Separation of its upstream business, which is composed of the natural gas, oil and natural gas liquids development, production and sales and commercial operations of EQT (collectively, the Upstream Business) and its midstream business, which is composed of the separately-operated natural gas gathering, transmission and storage and water services of EQT (collectively, the Midstream Business). Following the Separation, Equitrans Midstream gained control of EQM and owns the Midstream Business previously held by EQT.
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Years Ended December 31,
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2018
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2017
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2016
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Gathering operating revenues
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67
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%
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57
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%
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54
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%
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Transmission operating revenues
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26
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%
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42
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%
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46
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%
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Water operating revenues
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7
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%
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1
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%
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—
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%
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Mountain Valley Pipeline
. The MVP Joint Venture is a joint venture with EQM and affiliates of each of NextEra Energy, Inc., Con Edison, AltaGas Ltd. and RGC Resources, Inc. that is constructing the MVP. As of December 31, 2018, EQM is the operator of the MVP and owned a 45.5% interest in the MVP Joint Venture. The MVP is an estimated 300 mile, 42-inch diameter natural gas interstate pipeline with a targeted capacity of 2.0 Bcf per day that will span from EQM's existing transmission and storage system in Wetzel County, West Virginia to Pittsylvania County, Virginia, providing access to the growing southeast demand markets. As currently designed, the MVP is estimated to cost a total of approximately $4.6 billion, excluding AFUDC, of which EQM is expected to fund approximately $2.2 billion through capital contributions to the MVP Joint Venture, including approximately $65 million in excess of EQM's ownership interest. In 2019, EQM expects to make capital contributions of approximately $0.9 billion to the MVP Joint Venture, depending on the timing of the construction of the MVP and the MVP Southgate projects. The MVP Joint Venture has secured a total of 2.0 Bcf per day of firm capacity commitments at 20-year terms and is currently in negotiation with additional shippers that have expressed interest in the MVP project. The MVP Joint Venture is evaluating an expansion opportunity that could add approximately 0.5 Bcf per day of capacity through the installation of incremental compression. The MVP Joint Venture is also undertaking the MVP Southgate project and is evaluating other future pipeline extension projects.
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Wellhead Gathering Expansion and Hammerhead Project.
In 2019, EQM expects to invest approximately $900 million in gathering expansion projects, including the continued gathering infrastructure expansion of core development areas in the Marcellus and Utica Shales, primarily in southwestern Pennsylvania and eastern Ohio, for EQT, Range Resources Corporation (Range Resources) and other producers, and the Hammerhead project, a 1.6 Bcf per day gathering header pipeline that is designed to connect natural gas produced in Pennsylvania and West Virginia to the MVP and is supported by a 1.2 Bcf per day firm capacity commitment from EQT. The Hammerhead project is expected to cost a total of approximately
$555 million
. EQM expects to invest approximately $400 million in the
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MVP Southgate Project.
In April 2018, the MVP Joint Venture announced the MVP Southgate project, a proposed 70-mile interstate pipeline that will extend from the MVP at Pittsylvania County, Virginia to new delivery points in Rockingham and Alamance Counties, North Carolina. The MVP Southgate project is backed by a 300 MMcf per day firm capacity commitment from PSNC Energy. As designed, the MVP Southgate project has expansion capabilities that could provide up to 900 MMcf per day of total capacity. The MVP Southgate project is estimated to cost a total of approximately $450 million to $500 million, which is expected to be spent primarily in 2019 and 2020. In 2019, EQM expects to provide capital contributions of approximately $40 million to the MVP Joint Venture for the MVP Southgate project. In the fourth quarter of 2018, EQM assumed a portion of Con Edison's ownership interest and purchased a portion of PSNC Energy's ownership interest in the MVP Southgate project. As a result of these transactions, EQM's ownership interest increased from 32.7% to 47.2%. As of December 31, 2018, EQM was the operator of the MVP Southgate pipeline and owned a 47.2% interest in the MVP Southgate project. The MVP Joint Venture submitted the MVP Southgate certificate application to the FERC in November 2018. Subject to approval by the FERC, the MVP Southgate project has a targeted in-service date of the fourth quarter of 2020.
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Transmission Expansion
. In 2019, EQM expects to invest approximately $60 million in other transmission expansion projects, primarily attributable to the AVC, the Equitrans, L.P. Expansion project, which is designed to provide north-to-south capacity on the mainline Equitrans, L.P. system for deliveries to the MVP, and power plant projects. The Equitrans, L.P. Expansion project has a targeted in-service date of the fourth quarter of 2019.
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Transmission – New Power Plant Connection
. EQM recently executed a precedent agreement with ESC Brooke County Power I, LLC to construct a natural gas pipeline for connection to a proposed 830-Megawatt power plant in Brooke County, West Virginia. The agreement includes a ten-year firm reservation commitment for 140 MMcf per day of capacity. EQM expects to invest an estimated $80 million to construct the approximately 16-mile pipeline, which has a targeted in-service date of mid-year 2022.
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Water Expansion.
In 2019, EQM expects to invest approximately $100 million in the expansion of its fresh water delivery infrastructure in Pennsylvania and Ohio. EQM recently expanded its water service relationship with EQT and entered into agreements with four other Marcellus and Utica producers.
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rates and charges for natural gas transmission, storage and FERC-regulated gathering services;
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certification and construction of new interstate transmission and storage facilities;
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abandonment of interstate transmission and storage services and facilities;
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maintenance of accounts and records;
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relationships between pipelines and certain affiliates;
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terms and conditions of services and service contracts with customers;
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depreciation and amortization policies;
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acquisition and disposition of interstate transmission and storage facilities; and
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initiation and discontinuation of interstate transmission and storage services.
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requiring the acquisition of various permits to conduct regulated activities;
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requiring the installation of pollution-control equipment or otherwise restricting the way EQM can handle or dispose of its wastes;
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limiting or prohibiting construction activities in sensitive areas, such as wetlands, coastal regions or areas inhabited by endangered or threatened species; and
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requiring investigatory and remedial actions to mitigate or eliminate pollution conditions caused by EQM's operations or attributable to former operations.
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prevailing and projected natural gas, NGLs and oil prices;
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the proximity, capacity, cost and availability of gathering and transportation facilities, and other factors that result in differentials to benchmark prices;
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natural gas price volatility or a sustained period of lower commodity prices may have an adverse effect on EQT's drilling operations, revenue, profitability, future rate of growth
, credit worthiness
and liquidity;
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a further reduction in or slowing of EQT's anticipated drilling and production schedule, which would directly and adversely impact demand for our services;
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the costs of producing natural gas and the availability and costs of drilling rigs and crews and other equipment;
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infrastructure capacity constraints and interruptions;
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geologic considerations;
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risks associated with the operation of EQT's wells and facilities, including potential environmental liabilities;
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the availability
and cost
of capital on a satisfactory economic basis to fund EQT's operations;
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EQT's ability to identify exploration, development and production opportunities based on market conditions;
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uncertainties inherent in projecting future rates of production
, levels of reserves, and demand for natural gas, NGLs and oil
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EQT's ability to develop additional reserves that are economically recoverable, to optimize existing well production and to sustain production;
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adverse effects of governmental and environmental regulation,
including the availability of drilling permits, the regulation of hydraulic fracturing, the potential removal of certain federal income tax deductions with respect to natural gas and oil exploration and development or additional state taxes on natural gas extraction,
changes in tax laws and negative public perception regarding EQT's operations;
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the loss of key personnel; and
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risk associated with cyber security threats.
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the rates we charge for our gathering, transmission and storage services;
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the level of firm gathering, transmission and storage capacity sold and volumes of natural gas we gather, transport and store for our customers;
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regional, domestic and foreign supply and perceptions of supply of natural gas; the level of demand and perceptions of demand in our end-use markets; and actual and anticipated future prices of natural gas and other commodities (and the volatility thereof), which may impact our ability to renew and replace firm gathering, transmission and storage agreements;
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the effect of seasonal variations in temperature on the amount of natural gas that we gather, transport and store;
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the level of competition from other midstream energy companies in our geographic markets;
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the creditworthiness of our customers;
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restrictions contained in our joint venture agreements;
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the level of our operating, maintenance and general and administrative costs;
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regulatory action affecting the supply of, or demand for, natural gas, the rates we can charge on our assets, how we contract for services, our existing contracts, our operating costs or our operating flexibility; and
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prevailing economic conditions.
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the level and timing of capital expenditures we make;
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the level of our operating and general and administrative expenses, including reimbursements to our general partner and its affiliates, including Equitrans Midstream, for services provided to us;
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the cost of our acquisitions, if any;
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our debt service requirements and other liabilities;
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fluctuations in our working capital needs;
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our ability to borrow funds and access capital markets on satisfactory terms;
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restrictions on distributions contained in our debt agreements;
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the amount of cash reserves established by our general partner; and
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other business risks affecting our cash levels.
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rates and charges for natural gas transmission and storage and FERC-regulated gathering services;
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certification and construction of new interstate transmission and storage facilities;
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abandonment of interstate transmission and storage services and facilities;
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maintenance of accounts and records;
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relationships between pipelines and certain affiliates;
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terms and conditions of services and service contracts with customers;
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depreciation and amortization policies;
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acquisitions and dispositions of interstate transmission and storage facilities; and
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initiation and discontinuation of interstate transmission and storage services.
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the level of existing and new competition to provide services to our markets;
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the macroeconomic factors affecting natural gas economics for our current and potential customers;
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the balance of supply and demand, on a short-term, seasonal and long-term basis, in our markets;
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the extent to which the customers in our markets are willing to contract on a long-term basis; and
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the effects of federal, state or local regulations on the contracting practices of our customers.
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an inability to identify attractive expansion projects;
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an inability to obtain necessary rights-of-way, real-estate rights or permits or other government approvals, including approvals by regulatory agencies, whether as a result of further government shutdowns or otherwise;
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an inability to successfully integrate the infrastructure we build;
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an inability to raise financing for expansion projects on economically acceptable terms;
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incorrect assumptions about volumes, revenues and costs, including potential growth; or
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an inability to secure adequate customer commitments to use the newly expanded facilities.
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mistaken assumptions about volumes, revenues and costs, including synergies and potential growth;
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an inability to secure adequate customer commitments to use the acquired systems or facilities;
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an inability to integrate successfully the assets or businesses we acquire;
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the assumption of unknown liabilities for which we are not indemnified or for which our indemnity is inadequate;
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the diversion of management's and employees' attention from other business concerns; and
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unforeseen difficulties operating in new geographic areas or business lines.
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damage to pipelines, facilities, equipment
, environmental controls
and surrounding properties caused by hurricanes, earthquakes, tornadoes,
abnormal amounts of rainfall,
floods, fires, droughts, landslides and other natural disasters and acts of sabotage and terrorism;
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inadvertent damage from construction, vehicles, and farm and utility equipment;
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uncontrolled releases of natural gas and other hydrocarbons;
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leaks, migrations or losses of natural gas as a result of the malfunction of equipment or facilities and, with respect to storage assets, as a result of undefined boundaries, geologic anomalies, natural pressure migration and wellbore migration;
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ruptures, fires and explosions;
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pipeline freeze offs due to cold weather; and
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other hazards that could also result in personal injury and loss of life, pollution to the environment and suspension of operations.
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perform ongoing assessments of pipeline integrity;
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identify and characterize applicable threats to pipeline segments that could impact a HCA;
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maintain processes for data collection, integration and analysis;
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repair and remediate pipelines as necessary; and
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implement preventive and mitigating actions.
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incur or guarantee additional debt;
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make distributions on or redeem or repurchase units;
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incur or permit liens on assets;
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enter into certain types of transactions with affiliates;
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enter into certain mergers or acquisitions; and
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dispose of all or substantially all of our assets.
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our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes, may be impaired or such financing may not be available on favorable terms;
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our funds available for operations, future business opportunities and distributions to unitholders will be reduced by that portion of our cash flow required to make interest payments on our debt;
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we may be more vulnerable to competitive pressures or a downturn in our business or the economy generally; and
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our flexibility in responding to changing business and economic conditions may be limited.
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Neither our partnership agreement nor any other agreement requires Equitrans Midstream to pursue a business strategy that favors us, and the directors and officers of Equitrans Midstream have a fiduciary duty to make these decisions in the best interests of Equitrans Midstream, which may be contrary to our interests. Equitrans Midstream may choose to shift the focus of its investment and growth to areas not served by our assets.
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Equitrans Midstream is not limited in its ability to compete with us and may offer business opportunities and/or sell midstream assets to third parties without first offering us the right to bid for them.
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Our general partner is allowed to take into account the interests of parties other than us, such as Equitrans Midstream, in resolving conflicts of interest, which has the effect of limiting its state law fiduciary duty to our unitholders.
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Our general partner determines whether or not we incur debt and that decision may affect our credit ratings.
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Our partnership agreement replaces the fiduciary duties that would otherwise be owed by our general partner with contractual standards governing its duties, limits our general partner's liabilities and restricts the remedies available to our unitholders for actions that, without such limitations, might constitute breaches of fiduciary duty under state law.
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Except in limited circumstances, our general partner has the power and authority to conduct our business without unitholder approval.
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Our general partner controls the enforcement of the obligations that it and its affiliates owe to us, including Equitrans Midstream's obligations under the ETRN Omnibus Agreement.
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Our partnership agreement gives our general partner broad discretion in establishing financial reserves for the proper conduct of our business. These reserves will affect the amount of cash available for distribution to our unitholders.
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Our general partner determines the amount and timing of asset purchases and sales, borrowings, issuances of additional partnership securities and the creation, reduction or increase of reserves, each of which can affect the amount of cash available for distribution to our unitholders.
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Our general partner determines the amount and timing of any capital expenditures and, in accordance with the terms of our partnership agreement, whether a capital expenditure is classified as a maintenance capital expenditure, which reduces operating surplus, or an expansion or investment capital expenditure, which does not reduce operating surplus. These determinations can affect the amount of cash that is distributed to our unitholders.
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Our general partner determines which costs incurred by it and its affiliates are reimbursable by us.
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Our general partner may cause us to borrow funds in order to permit the payment of cash distributions.
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Our partnership agreement permits us to classify up to $30 million as operating surplus, even if it is generated from asset sales, non-working capital borrowings or other sources that would otherwise constitute capital surplus.
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Our partnership agreement does not restrict our general partner from causing us to pay it or its affiliates for any services rendered to us or entering into additional contractual arrangements with any of these entities on our behalf.
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Our general partner intends to limit its liability regarding our contractual and other obligations.
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Our general partner may exercise its right to call and purchase all of our common units not owned by it and its affiliates if they own more than 80% of the common units.
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Our general partner decides whether to retain separate counsel, accountants or others to perform services for us.
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how to allocate corporate opportunities among us and other affiliates;
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whether to exercise its limited call right;
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whether to seek approval of the resolution of a conflict of interest by the conflicts committee of the board of directors of our general partner;
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how to exercise its voting rights with respect to the units it owns; and
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whether or not to consent to any merger, consolidation or conversion of the partnership or amendment to our partnership agreement.
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whenever our general partner, the board of directors of our general partner or any committee thereof (including the conflicts committee) makes a determination or takes, or declines to take, any other action in their respective capacities, our general partner, the board of directors of our general partner and any committee thereof (including the conflicts committee), as applicable, is required to make such determination, or take or decline to take such other action, in good faith, meaning that it subjectively believed that the decision was in the best interests of our partnership, and, except as specifically provided by our partnership agreement, will not be subject to any other or different standard imposed by our partnership agreement, Delaware law, or any other law, rule or regulation, or at equity;
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our general partner will not have any liability to us or our unitholders for decisions made in its capacity as a general partner so long as such decisions are made in good faith;
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our general partner and its officers and directors will not be liable for monetary damages to us or our limited partners resulting from any act or omission unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that our general partner or its officers and directors, as the case may be, acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that the conduct was criminal; and
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our general partner will not be in breach of its obligations under our partnership agreement (including any duties to us or our unitholders) if a transaction with an affiliate or the resolution of a conflict of interest is:
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approved by the conflicts committee of the board of directors of our general partner, although our general partner is not obligated to seek such approval;
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approved by the vote of unitholders holding a majority of our outstanding common units, excluding any common units owned by our general partner and its affiliates;
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determined by the board of directors of our general partner to be on terms no less favorable to us than those generally being provided to or available from unrelated third parties; or
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determined by the board of directors of our general partner to be fair and reasonable to us, taking into account the totality of the relationships among the parties involved, including other transactions that may be particularly favorable or advantageous to us.
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our existing unitholders' proportionate ownership interest in us will decrease;
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the amount of distributable cash flow on each unit may decrease;
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the ratio of taxable income to distributions may increase;
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the relative voting strength of each previously outstanding unit may be diminished; and
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the market price of our common units may decline.
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we were conducting business in a state but had not complied with that particular state's partnership statute; or
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such unitholder's right to act with other unitholders to remove or replace our general partner, to approve some amendments to our partnership agreement or to take other actions under our partnership agreement constitutes "control" of our business.
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In February 2018, the Sierra Club filed a lawsuit,
Sierra Club, et al. v. U.S. Army Corps of Engineers, et al.
, consolidated under Case No. 18-1173, in the United States Fourth Circuit Court of Appeals (Fourth Circuit) against the U.S. Army Corps of Engineers (the U.S. Army Corps) challenging the verification by the Huntington District of the U.S. Army Corps that Nationwide Permit 12, which generally authorizes under Section 404 of the Clean Water Act discharges of dredge or fill material into waters of the United States and the construction of pipelines across such waters, could be utilized in the Huntington District (which covers all but the northernmost area of West Virginia) for the MVP project. The crux of Sierra Club's position was that the MVP Joint Venture, pursuant to its FERC license, planned to use a certain methodology (dry open cut creek crossing methodology) to construct the pipeline across streams in West Virginia that would take considerably longer than the 72 hours allowed for such activities pursuant to
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•
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On April 13, 2017, the West Virginia Department of Environmental Protection (WVDEP) issued a 401 Water Quality Certification for the U.S. Army Corps Nationwide Permits. In August 2018, the WVDEP initiated an administrative process to revise this certification and requested public comment to, among other things, specifically revise the 72-hour limit for stream crossings noted as problematic by the Fourth Circuit as well as other conditions. The WVDEP has issued a new notice and comment period for further modifications of the 401 certification. This notice and comment period will end on March 4, 2019. The full administrative process requires notice and opportunity for public comment, response to public comment, and adherence to the state's administrative procedures legislation. The WVDEP is also required to obtain the EPA's agreement to the modified 401 certification. Assuming that the WVDEP's administrative process results in the clarification or elimination of any problematic conditions, and the EPA's agreement is secured, the MVP Joint Venture anticipates that it will once again secure from the U.S. Army Corps Districts within West Virginia verification that its activities, including stream crossings, may proceed under Nationwide Permit 12 as re-certified by the WVDEP. The MVP Joint Venture expects that reverification to occur within the first half of 2019. However, the MVP Joint Venture cannot guarantee that either the WVDEP, the EPA or the U.S. Army Corps Districts will act promptly or be deemed to have acted properly if challenged, in which case re-verification may be delayed past the first half of 2019.
|
•
|
In June 2018, the Sierra Club filed a second petition in the Fourth Circuit against the U.S. Army Corps, seeking review and a stay of the U.S. Army Corps' Norfolk District decision to verify the MVP Joint Venture's use of Nationwide Permit 12 for stream crossings in Virginia.
Sierra Club, et al. v. U.S. Army U.S. Army Corps of Engineers, et al.
, Case No. 18-1713. The Fourth Circuit denied the Sierra Club's request for a stay on August 28, 2018. On October 5, 2018, the U.S. Army Corps' Norfolk District suspended its verification under Nationwide Permit 12 for stream crossings in Virginia pending the resolution of the West Virginia proceedings outlined above. On December 10, 2018, the U.S. Army Corps filed a motion to place the case in abeyance which the court granted on January 9, 2019. Until the U.S. Army Corps lifts its suspension, the MVP Joint Venture cannot perform any construction activities in any streams and wetlands in Virginia.
|
•
|
In a different Fourth Circuit appeal filed in December 2017, the Sierra Club challenged a Bureau of Land Management (BLM) decision to grant a right-of-way to the MVP Joint Venture and a U.S. Forest Service (USFS) decision to amend its management plan to accommodate MVP, both of which affect the MVP's 3.6-mile segment in the Jefferson National Forest in Virginia.
Sierra Club, et al. v. U.S. Forest Service, et al.
, consolidated under Case No. 17-2399. On July 27, 2018, agreeing in part with the Sierra Club, the Fourth Circuit vacated the BLM and USFS decisions, finding fault with the USFS' analysis of erosion and sedimentation effects and the BLM's analysis of the practicality of alternate routes. On August 3, 2018, citing the court's vacatur and remand, the FERC issued a stop work order for the entire pipeline pending the agency actions on remand. The FERC modified its stop work order on August 29, 2018 to allow work to continue on all but approximately 25 miles of the project. The MVP Joint Venture has resumed construction of those portions of the pipeline. On October 10, 2018, the Fourth Circuit granted a petition for rehearing filed by the MVP Joint Venture for the limited purpose of clarifying that the July 27, 2018, order did not vacate the portion of the BLM's Record of Decision authorizing a right-of-way and temporary use permit for MVP to cross the Weston and Gauley Bridge Turnpike Trail in Braxton County, West Virginia. On October 15, 2018, the MVP Joint Venture filed with the FERC a request to further modify the August 3, 2018 stop work order to allow the MVP Joint Venture to complete bore and install the pipeline under the Weston and Gauley Bridge Turnpike Trail. On October 24, 2018, the FERC granted the MVP Joint Venture's request to further modify the stop work order and authorize construction. The MVP Joint Venture has resumed construction of those portions of the pipeline. However, work on the 3.6-mile segment in the Jefferson National Forest must await a revised authorization, which the MVP Joint Venture is working to obtain.
|
•
|
Multiple parties have sought judicial review of the FERC's order issuing a certificate of convenience and necessity to the MVP Joint Venture and/or the exercise by the MVP Joint Venture of eminent domain authority. There are multiple consolidated petitions before the Court of Appeals for the District of Columbia Circuit seeking direct review of the FERC order under the Natural Gas Act in
Appalachian Voices, et al. v. FERC, et al
., consolidated under Case No. 17-1271. Those petitioners requested a stay of the FERC's order pending the resolution of the petitions, which the FERC and the MVP Joint Venture opposed. The Court of Appeals denied the request for a stay on August 30, 2018. Oral argument on the merits of the petitions for review was held on January 28, 2019. Another group of parties filed a complaint in the U.S. District Court for the District of Columbia asserting that the FERC's order issuing certificates is unlawful on constitutional and other grounds in
Bold Alliance, et al. v. FERC, et al.
, Case No. 1:17-cv-01822-RJL. The district court plaintiffs seek declaratory relief as well as an injunction preventing the MVP Joint Venture from developing its project or exercising eminent domain authority. In December 2017 and January 2018, the FERC and the MVP Joint Venture, respectively, moved to dismiss the petitions for lack of subject matter jurisdiction. The court granted the motion and dismissed this complaint on September 28, 2018. On October 26, 2018, plaintiffs appealed to the U.S. Court of Appeals for the District of Columbia in
Bold Alliance, et al. v. FERC, et al.
, Case No. 18-5322. On December 3, 2018, the FERC, as appellee, filed a joint motion with the appellants to hold Case No. 18-5322 in abeyance pending completion of the ongoing appeals of the final agency orders related to the MVP certificate in consolidated Case No. 17-1271. If one or more of these challenges were successful, it could result in the MVP Joint Venture's certificate of convenience and necessity being vacated and/or additional proceedings before the FERC, the outcome of which
EQM cannot predict.
|
•
|
Several landowners have challenged the constitutionality of the eminent domain provisions of the Natural Gas Act generally and as applied to the MVP Joint Venture specifically. The U.S. District Court for the Western District of Virginia, in
Orus Ashby Berkley, et al. v. Mountain Valley Pipeline, LLC, et al.
, Case No. 7:17-cv-00357-EKD, dismissed the challenge for lack of subject matter jurisdiction in January 2018. The Fourth Circuit affirmed this judgment on appeal in July 2018 in
Orus Ashby Berkley, et al. v. Mountain Valley Pipeline, LLC, et al.
, Case No. 18-1042. In October 2018, the plaintiffs petitioned the U.S. Supreme Court for a writ of certiorari with respect to these jurisdictional rulings in
Orus Ashby Berkley, et al. v. FERC, et al.
, Case No. 18-561. On January 22, 2019, the U.S. Supreme Court denied the writ of certiorari.
|
•
|
Several landowners have filed challenges in various U.S. District Courts to the condemnation proceedings by which the MVP Joint Venture obtained access to their property. In each case, the district court found that the MVP Joint Venture was entitled to immediate possession of the easements, and the landowners appealed to the Fourth Circuit. The Fourth Circuit has consolidated these cases in
Mountain Valley Pipeline, LLC v. 6.56 Acres of Land, et al.
, consolidated under Case No. 18-1159, and held oral argument in September 2018. On February 5, 2019, the Fourth Circuit Court of Appeals issued an opinion affirming the decisions of the U.S. District Courts granting the MVP Joint Venture immediate access for construction of the pipeline.
|
•
|
In August 2017, the Greenbrier River Watershed Association appealed the MVP Joint Venture's Natural Stream Preservation Act Permit obtained from the West Virginia Environmental Quality Board (WVEQB) for the Greenbrier River crossing. Petitioners alleged that the issuance of the permit failed to comply with West Virginia's Water Quality Standards for turbidity and sedimentation. WVEQB dismissed the appeal in June 2018. In July 2018, the Greenbrier River Watershed Association appealed the decision to the Circuit Court of Summers County, asking the court to remand the permit with instructions to impose state-designated construction windows and pre- and post-construction monitoring requirements as well as a reversal of the WVEQB's decision that the permit was lawful. On September 18, 2018, the Circuit Court granted a stay. A hearing on the merits was held on October 23, 2018. The court has not yet issued a decision. In the event of an adverse decision, the MVP Joint Venture would appeal or work with the WVDEP to attempt to resolve the issues identified by the court.
|
•
|
On December 13, 2018, in
Cowpasture River Preservation Association, et al. v. U.S. Forest Service, et al.
, Case No. 18-1144, an unrelated case involving the Atlantic Coast Pipeline, the Fourth Circuit held that the Forest Service, which is part of the Department of Agriculture, lacked the authority to grant rights-of-way for oil and gas pipelines to cross the Appalachian Trail. Although the MVP Joint Venture obtained its grant to cross the Appalachian Trail from the BLM, a part of the Department of Interior, the rationale of the Fourth Circuit's opinion could apply to the BLM as well. The MVP Joint Venture anticipates that the Forest Service will request rehearing or en banc review of the Fourth Circuit's decision.
|
•
|
On January 7, 2019, the MVP Joint Venture received a letter from the U.S. Attorney's Office for the Western District of Virginia stating that it and the EPA are investigating potential criminal and/or civil violations of the Clean Water Act
|
•
|
On December 7, 2018, the Virginia Department of Environmental Quality and the State Water Control Board filed suit against the MVP Joint Venture in the Circuit Court of Henrico County, captioned
Paylor, et al. v. Mountain Valley Pipeline, LLC
, Case No. CL18-4874-00, alleging violations of Virginia's State Water Control Law, Water Resources and Wetlands Protection Program, and Water Protection Permit Program Regulations at sites in Craig, Franklin, Giles, Montgomery and Roanoke Counties, Virginia. The MVP Joint Venture answered the suit on January 11, 2019, stating that it does not admit and will contest the allegations. The MVP Joint Venture has initiated settlement negotiations to resolve this matter. The MVP Joint Venture anticipates that a resolution could result in penalties and injunctive relief designed to assure compliance with relevant environmental laws and regulations. Shortly after the filing of this suit, the Virginia State Water Control Board (VSWCB) voted to reconsider/schedule a hearing to revoke MVP's Clean Water Act Section 401 certification. The MVP Joint Venture was informed that the VSWCB has provided public notice of a special VSWCB meeting to be held on March 1, 2019 to discuss the MVP's Clean Water Act Section 401 certification. MVP will vigorously oppose any action by the VSWCB which would result in revocation of its authorizations to continue project activities in Virginia.
|
|
|
As of and for the Years Ended December 31,
|
||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Statements of Consolidated Operations
|
|
|
|
(Thousands, except per unit amounts)
|
|
|
||||||||||||||
Operating revenues
|
|
$
|
1,495,098
|
|
|
$
|
895,558
|
|
|
$
|
732,272
|
|
|
$
|
632,936
|
|
|
$
|
489,218
|
|
Operating income
|
|
726,653
|
|
|
620,705
|
|
|
527,856
|
|
|
451,036
|
|
|
332,595
|
|
|||||
Net income
|
|
$
|
671,348
|
|
|
$
|
610,360
|
|
|
$
|
537,954
|
|
|
$
|
455,126
|
|
|
$
|
284,816
|
|
Net income attributable to EQM
|
|
$
|
668,002
|
|
|
$
|
609,626
|
|
|
$
|
537,954
|
|
|
$
|
455,126
|
|
|
$
|
284,816
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income per limited partner unit
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic
|
|
$
|
2.43
|
|
|
$
|
5.19
|
|
|
$
|
5.21
|
|
|
$
|
4.71
|
|
|
$
|
3.53
|
|
Diluted
|
|
2.43
|
|
|
5.19
|
|
|
5.21
|
|
|
4.70
|
|
|
3.52
|
|
|||||
Cash distributions paid per limited partner unit
|
|
$
|
4.295
|
|
|
$
|
3.655
|
|
|
$
|
3.05
|
|
|
$
|
2.505
|
|
|
$
|
2.02
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total assets
|
|
$
|
9,456,121
|
|
|
$
|
7,998,835
|
|
|
$
|
3,075,840
|
|
|
$
|
2,833,358
|
|
|
$
|
1,943,366
|
|
Long-term debt
|
|
$
|
4,081,639
|
|
|
$
|
1,453,352
|
|
|
$
|
985,732
|
|
|
$
|
493,401
|
|
|
$
|
492,633
|
|
(a)
|
Net income attributable to the EQM-RMP Merger, the Drop-Down Transaction, the October 2016 Acquisition, the NWV Gathering Acquisition and the Jupiter Acquisition for the periods prior to July 23, 2018, May 1, 2018, October 1, 2016, March 17, 2015 and May 7, 2014, respectively, was not allocated to the limited partners for purposes of calculating net income per limited partner unit as these pre-acquisition amounts were not available to the unitholders. See Note
1
to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further discussion.
|
(a)
|
Includes the pre-acquisition results of the October 2016 Transaction, the Drop-Down Transaction and the EQM-RMP Merger, which were effective on October 1, 2016, May 1, 2018 and July 23, 2018, respectively. The recasts are for the period the acquired businesses were under the common control of EQT.
|
|
|
Years Ended December 31,
|
||||||||||||||||
|
|
2018
|
|
2017
|
|
% Change
|
|
2016
|
|
% Change
|
||||||||
FINANCIAL DATA
|
|
(Thousands, except per day amounts)
|
||||||||||||||||
Firm reservation fee revenues
|
|
$
|
356,725
|
|
|
$
|
348,193
|
|
|
2.5
|
|
|
$
|
277,816
|
|
|
25.3
|
|
Volumetric-based fee revenues
|
|
30,076
|
|
|
23,793
|
|
|
26.4
|
|
|
56,962
|
|
|
(58.2
|
)
|
|||
Total operating revenues
|
|
386,801
|
|
|
371,986
|
|
|
4.0
|
|
|
334,778
|
|
|
11.1
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating and maintenance
|
|
39,563
|
|
|
33,908
|
|
|
16.7
|
|
|
31,504
|
|
|
7.6
|
|
|||
Selling, general and administrative
|
|
31,936
|
|
|
31,922
|
|
|
—
|
|
|
32,792
|
|
|
(2.7
|
)
|
|||
Depreciation
|
|
49,723
|
|
|
58,689
|
|
|
(15.3
|
)
|
|
32,269
|
|
|
81.9
|
|
|||
Total operating expenses
|
|
121,222
|
|
|
124,519
|
|
|
(2.6
|
)
|
|
96,565
|
|
|
28.9
|
|
|||
Operating income
|
|
$
|
265,579
|
|
|
$
|
247,467
|
|
|
7.3
|
|
|
$
|
238,213
|
|
|
3.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity income
|
|
$
|
61,778
|
|
|
$
|
22,171
|
|
|
178.6
|
|
|
$
|
9,898
|
|
|
124.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
OPERATIONAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Transmission pipeline throughput (BBtu per day)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Firm capacity reservation
|
|
2,903
|
|
|
2,399
|
|
|
21.0
|
|
|
1,651
|
|
|
45.3
|
|
|||
Volumetric-based services
|
|
59
|
|
|
37
|
|
|
59.5
|
|
|
430
|
|
|
(91.4
|
)
|
|||
Total transmission pipeline throughput
|
|
2,962
|
|
|
2,436
|
|
|
21.6
|
|
|
2,081
|
|
|
17.1
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Average contracted firm transmission reservation commitments (BBtu per day)
|
|
3,909
|
|
|
3,627
|
|
|
7.8
|
|
|
2,814
|
|
|
28.9
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Capital expenditures
|
|
$
|
114,450
|
|
|
$
|
111,102
|
|
|
3.0
|
|
|
$
|
292,049
|
|
|
(62.0
|
)
|
|
Years Ended December 31,
|
||||||||||||||
|
2018
(a)
|
|
2017
(a)
|
|
% Change
|
|
2016
|
|
% Change
|
||||||
|
(Thousands)
|
||||||||||||||
FINANCIAL DATA
|
|
|
|
|
|
|
|
|
|
||||||
Water service revenues
|
$
|
111,227
|
|
|
$
|
13,605
|
|
|
717.5
|
|
$
|
—
|
|
|
100.0
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||
Operating and maintenance
|
44,152
|
|
|
5,598
|
|
|
688.7
|
|
—
|
|
|
100.0
|
|||
Selling, general and administrative
|
5,895
|
|
|
347
|
|
|
1,598.8
|
|
—
|
|
|
100.0
|
|||
Depreciation
|
23,513
|
|
|
3,515
|
|
|
568.9
|
|
—
|
|
|
100.0
|
|||
Total operating expenses
|
73,560
|
|
|
9,460
|
|
|
677.6
|
|
—
|
|
|
100.0
|
|||
Operating income
|
$
|
37,667
|
|
|
$
|
4,145
|
|
|
808.7
|
|
$
|
—
|
|
|
100.0
|
|
|
|
|
|
|
|
|
|
|
||||||
OPERATIONAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Water services volumes (MMgal)
|
2,088
|
|
|
226
|
|
|
823.9
|
|
—
|
|
|
100.0
|
|||
Capital expenditures
|
$
|
23,537
|
|
|
$
|
6,233
|
|
|
277.6
|
|
$
|
—
|
|
|
100.0
|
(a)
|
EQM's consolidated financial statements have been retrospectively recast to include the pre-acquisition results of the EQM-RMP Merger, which was effective July 23, 2018. The recast is for the period the acquired businesses were under the common control of EQT, which began on November 13, 2017 as a result of the Rice Merger.
|
•
|
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.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(Thousands)
|
||||||||||
Net income attributable to EQM
|
$
|
668,002
|
|
|
$
|
609,626
|
|
|
$
|
537,954
|
|
Add:
|
|
|
|
|
|
||||||
Net interest expense
|
122,094
|
|
|
36,955
|
|
|
16,766
|
|
|||
Depreciation
|
171,914
|
|
|
107,161
|
|
|
62,691
|
|
|||
Amortization of intangible assets
|
41,547
|
|
|
5,540
|
|
|
—
|
|
|||
Impairment of goodwill
(a)
|
261,941
|
|
|
—
|
|
|
—
|
|
|||
Income tax expense
|
—
|
|
|
—
|
|
|
10,147
|
|
|||
Preferred Interest payments
(b)
|
10,984
|
|
|
10,984
|
|
|
2,764
|
|
|||
Non-cash long-term compensation expense
|
1,275
|
|
|
242
|
|
|
195
|
|
|||
Transaction costs
|
7,761
|
|
|
—
|
|
|
—
|
|
|||
Less:
|
|
|
|
|
|
||||||
Equity income
|
(61,778
|
)
|
|
(22,171
|
)
|
|
(9,898
|
)
|
|||
AFUDC – equity
|
(5,570
|
)
|
|
(5,110
|
)
|
|
(19,402
|
)
|
|||
Pre-acquisition capital lease payments for AVC
(c)
|
—
|
|
|
—
|
|
|
(17,186
|
)
|
|||
Adjusted EBITDA attributable to RMP prior to merger
(d)
|
(160,128
|
)
|
|
(33,457
|
)
|
|
—
|
|
|||
Adjusted EBITDA attributable to the Drop-Down Transaction
(e)
|
(60,507
|
)
|
|
(20,272
|
)
|
|
—
|
|
|||
Adjusted EBITDA attributable to the October 2016 Acquisition
(f)
|
—
|
|
|
—
|
|
|
(11,420
|
)
|
|||
Adjusted EBITDA
|
$
|
997,535
|
|
|
$
|
689,498
|
|
|
$
|
572,611
|
|
Less:
|
|
|
|
|
|
|
|
||||
Net interest expense excluding interest income on the Preferred Interest
|
(124,198
|
)
|
|
(42,999
|
)
|
|
(18,506
|
)
|
|||
Capitalized interest and AFUDC – debt
(g)
|
(9,873
|
)
|
|
(4,120
|
)
|
|
(9,400
|
)
|
|||
Ongoing maintenance capital expenditures net of reimbursements
(h)
|
(46,939
|
)
|
|
(27,609
|
)
|
|
(21,434
|
)
|
|||
Transaction costs
|
(7,761
|
)
|
|
—
|
|
|
—
|
|
|||
Distributable cash flow
|
$
|
808,764
|
|
|
$
|
614,770
|
|
|
$
|
523,271
|
|
|
|
|
|
|
|
||||||
Net cash provided by operating activities
|
$
|
1,187,239
|
|
|
$
|
681,848
|
|
|
$
|
537,904
|
|
Adjustments:
|
|
|
|
|
|
||||||
Pre-acquisition capital lease payments for AVC
(c)
|
—
|
|
|
—
|
|
|
(17,186
|
)
|
|||
Capitalized interest and AFUDC – debt
(g)
|
(9,873
|
)
|
|
(4,120
|
)
|
|
(9,400
|
)
|
|||
Principal payments received on the Preferred Interest
|
4,406
|
|
|
4,166
|
|
|
1,024
|
|
|||
Ongoing maintenance capital expenditures net of reimbursements
(h)
|
(46,939
|
)
|
|
(27,609
|
)
|
|
(21,434
|
)
|
|||
Current tax expense
|
—
|
|
|
—
|
|
|
1,373
|
|
|||
Adjusted EBITDA attributable to RMP prior to merger
(d)
|
(160,128
|
)
|
|
(33,457
|
)
|
|
—
|
|
|||
Adjusted EBITDA attributable to the Drop-Down Transaction
(e)
|
(60,507
|
)
|
|
(20,272
|
)
|
|
—
|
|
|||
Adjusted EBITDA attributable to the October 2016 Acquisition
(f)
|
—
|
|
|
—
|
|
|
(11,420
|
)
|
|||
Other, including changes in working capital
|
(105,434
|
)
|
|
14,214
|
|
|
42,410
|
|
|||
Distributable cash flow
|
$
|
808,764
|
|
|
$
|
614,770
|
|
|
$
|
523,271
|
|
(a)
|
As a result of annual goodwill impairment assessment, EQM recorded an impairment of goodwill of approximately
$261.9 million
. See "Outlook" and Note 1 for further information.
|
(b)
|
In conjunction with the October 2016 Acquisition, the operating agreement of EES was amended and the accounting for EQM's Preferred Interest in EES converted from a cost method investment to a note receivable effective October 1, 2016. There were no changes in the cash payments; however, distributions from EES subsequent to this amendment were recorded partly as a reduction in the note receivable and partly as interest income, which is included in net interest expense in the accompanying statements of consolidated operations. Distributions received from EES prior to this amendment in 2016 were included in other income in the accompanying statements of consolidated operations.
|
(c)
|
Reflects capital lease payments due under the lease. These lease payments were generally made monthly on a one month lag prior to the October 2016 Acquisition.
|
(d)
|
Adjusted EBITDA attributable to RMP for the period prior to July 23, 2018 was excluded from EQM's adjusted EBITDA calculations as these amounts were generated by RMP prior to acquisition by EQM; therefore, the amounts could not be distributed to EQM's unitholders. Adjusted EBITDA attributable to RMP for the year ended December 31, 2018 and for the period from November 13, 2017 to December 31, 2017 was calculated as net income of $123.2 million and $25.1 million, respectively, plus net interest expense of $4.6 million and $0.8 million, respectively, depreciation of $31.4 million and $7.5 million, respectively, and non-cash compensation expense of $0.9 million and less than $0.1 million, respectively.
|
(e)
|
Adjusted EBITDA attributable to the Drop-Down Transaction for the period prior to May 1, 2018 was excluded from EQM's adjusted EBITDA calculations as these amounts were generated by assets acquired in the Drop-Down Transaction prior to acquisition by EQM; therefore, the amounts could not have been distributed to EQM's unitholders. Adjusted EBITDA attributable to the Drop-Down Transaction for the year ended December 31, 2018 and for the period from November 13, 2017 to December 31, 2018 was calculated as net income of $41.0 million and $12.6 million, respectively, plus depreciation of $5.8 million and $2.2 million, respectively, and amortization of intangible assets of $13.8 million and $5.5 million, respectively, less interest income of less than $0.1 million and $0.1 million, respectively.
|
(f)
|
Adjusted EBITDA attributable to the October 2016 Acquisition prior to acquisition for the periods presented was excluded from EQM's adjusted EBITDA calculations as these amounts were generated by AVC, Rager and the Gathering Assets prior to acquisition by EQM; therefore, the amounts could not have been distributed to EQM's unitholders. Adjusted EBITDA attributable to the October 2016 Acquisition prior to acquisition for the year ended December 31, 2016 was calculated as net income of $1.3 million plus depreciation of $2.1 million and income tax expense of $10.1 million, less interest income of $0.5 million and AFUDC - equity of $1.6 million.
|
(g)
|
As a result of increased significance of capitalized interest and AFUDC - debt in 2016, this line item was added as an adjustment to the calculation of distributable cash flow for the year ended December 31, 2016.
|
(h)
|
Ongoing maintenance capital expenditures are expenditures (including expenditures for the construction or development of new capital assets or the replacement, improvement or expansion of existing capital assets) made to maintain, over the long term, EQM's operating capacity or operating income. In the Predecessor period, EQT had reimbursement obligations to EQM for certain maintenance capital expenditures under the terms of the EQT Omnibus Agreement. For further explanation of these reimbursable maintenance capital expenditures, see "Capital Requirements." For the year ended December 31,
2016
, ongoing maintenance capital expenditures net of reimbursements excludes ongoing maintenance of
$6.5 million
attributable to AVC, Rager and the Gathering Assets prior to acquisition.
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
(Thousands)
|
|||||||||||
Expansion capital expenditures
(a)
|
|
$
|
803,347
|
|
|
$
|
328,529
|
|
|
$
|
558,071
|
|
Maintenance capital expenditures
|
|
51,891
|
|
|
43,328
|
|
|
29,293
|
|
|||
Total capital expenditures
|
|
855,238
|
|
|
371,857
|
|
|
587,364
|
|
|||
Plus: accrued capital expenditures at the end of prior period
(b)
|
|
90,655
|
|
|
26,678
|
|
|
24,133
|
|
|||
Plus: accrued capital expenditures at acquisition on November 13, 2017
(b)
|
|
—
|
|
|
72,271
|
|
|
—
|
|
|||
Less: accrued capital expenditures at the end of current period
(b)
|
|
(108,890
|
)
|
|
(90,655
|
)
|
|
(26,678
|
)
|
|||
Total cash capital expenditures
|
|
$
|
837,003
|
|
|
$
|
380,151
|
|
|
$
|
584,819
|
|
(a)
|
Expansion capital expenditures do not include capital contributions made to the MVP Joint Venture of
$913.2 million
,
$159.6 million
and
$98.4 million
for the years ended
December 31, 2018
,
2017
and 2016, respectively.
|
(b)
|
EQM accrues capital expenditures when capital work has been completed but the associated bills have not yet been paid. Accrued capital expenditures are excluded from the statements of consolidated cash flows until they are paid.
|
Rating Service
|
|
Senior Notes
|
|
Outlook
|
Moody's
|
|
Ba1
|
|
Stable
|
S&P
|
|
BBB-
|
|
Stable
|
Fitch
|
|
BBB-
|
|
Stable
|
|
|
Total
|
|
2019
|
|
2020-2021
|
|
2022-2023
|
|
2024+
|
||||||||||
|
|
(Thousands)
|
||||||||||||||||||
Long-term debt
|
|
$
|
3,500,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,100,000
|
|
|
$
|
2,400,000
|
|
Credit facility borrowings
(a)
|
|
625,000
|
|
|
—
|
|
|
—
|
|
|
625,000
|
|
|
—
|
|
|||||
Interest payments on senior notes
(b)
|
|
2,093,736
|
|
|
182,861
|
|
|
350,750
|
|
|
350,750
|
|
|
1,209,375
|
|
|||||
Purchase obligations
|
|
56,526
|
|
|
56,526
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Water infrastructure
(c)
|
|
767
|
|
|
767
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Operating lease obligations
(d)
|
|
2,688
|
|
|
1,524
|
|
|
841
|
|
|
323
|
|
|
—
|
|
|||||
Total contractual obligations
|
|
$
|
6,278,717
|
|
|
$
|
241,678
|
|
|
$
|
351,591
|
|
|
$
|
2,076,073
|
|
|
$
|
3,609,375
|
|
(a)
|
Credit facility borrowings were classified based on the termination date of the amended and restated credit facility agreement.
|
(b)
|
Interest payments exclude interest related to the credit facility borrowings as the interest rate on the credit facility borrowings is variable.
|
(c)
|
See Note
14
for additional information.
|
(d)
|
Operating leases are primarily entered into for various office locations and warehouse buildings, as well as lease obligations for compression equipment under existing contracts with third parties.
|
|
Page
Reference
|
Reports of Independent Registered Public Accounting Firm
|
|
Statements of Consolidated Operations for the Years Ended December 31, 2018, 2017 and 2016
|
|
Statements of Consolidated Cash Flows for the Years Ended December 31, 2018, 2017 and 2016
|
|
Consolidated Balance Sheets as of December 31, 2018 and 2017
|
|
Statements of Consolidated Equity for the Years Ended December 31, 2018, 2017 and 2016
|
|
Notes to Consolidated Financial Statements
|
/s/ Ernst & Young, LLP
|
|
We have served as the Partnership's auditor since 2012.
|
|
Pittsburgh, Pennsylvania
|
|
February 14, 2019
|
|
/s/ Ernst & Young, LLP
|
|
Pittsburgh, Pennsylvania
|
|
February 14, 2019
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
(Thousands, except per unit amounts)
|
||||||||||
Operating revenues
(b)
|
$
|
1,495,098
|
|
|
$
|
895,558
|
|
|
$
|
732,272
|
|
Operating expenses:
|
|
|
|
|
|
|
|
||||
Operating and maintenance
(c)
|
163,192
|
|
|
84,831
|
|
|
69,255
|
|
|||
Selling, general and administrative
(c)
|
129,851
|
|
|
77,321
|
|
|
72,470
|
|
|||
Depreciation
|
171,914
|
|
|
107,161
|
|
|
62,691
|
|
|||
Amortization of intangible assets
|
41,547
|
|
|
5,540
|
|
|
—
|
|
|||
Impairment of goodwill
|
261,941
|
|
|
—
|
|
|
—
|
|
|||
Total operating expenses
|
768,445
|
|
|
274,853
|
|
|
204,416
|
|
|||
Operating income
|
726,653
|
|
|
620,705
|
|
|
527,856
|
|
|||
Equity income
(d)
|
61,778
|
|
|
22,171
|
|
|
9,898
|
|
|||
Other income
|
5,011
|
|
|
4,439
|
|
|
27,113
|
|
|||
Net interest expense
(e)
|
122,094
|
|
|
36,955
|
|
|
16,766
|
|
|||
Income before income taxes
|
671,348
|
|
|
610,360
|
|
|
548,101
|
|
|||
Income tax expense
|
—
|
|
|
—
|
|
|
10,147
|
|
|||
Net income
|
671,348
|
|
|
610,360
|
|
|
537,954
|
|
|||
Net income attributable to noncontrolling interest
|
3,346
|
|
|
734
|
|
|
—
|
|
|||
Net income attributable to EQM
|
$
|
668,002
|
|
|
$
|
609,626
|
|
|
$
|
537,954
|
|
|
|
|
|
|
|
||||||
Calculation of limited partners interest in net income:
|
|
|
|
|
|
|
|
||||
Net income attributable to EQM
|
$
|
668,002
|
|
|
$
|
609,626
|
|
|
$
|
537,954
|
|
Less pre-acquisition net income allocated to parent
|
(164,242
|
)
|
|
(37,722
|
)
|
|
(21,861
|
)
|
|||
Less general partner interest in net income - general partner units
|
(6,104
|
)
|
|
(10,060
|
)
|
|
(9,173
|
)
|
|||
Less general partner interest in net income - IDRs
|
(255,927
|
)
|
|
(143,531
|
)
|
|
(93,568
|
)
|
|||
Limited partners' interest in net income
|
$
|
241,729
|
|
|
$
|
418,313
|
|
|
$
|
413,352
|
|
|
|
|
|
|
|
||||||
Net income per limited partner unit – basic
|
$
|
2.43
|
|
|
$
|
5.19
|
|
|
$
|
5.21
|
|
Net income per limited partner unit – diluted
|
$
|
2.43
|
|
|
$
|
5.19
|
|
|
$
|
5.21
|
|
|
|
|
|
|
|
||||||
Weighted average limited partner units outstanding – basic
|
99,303
|
|
|
80,603
|
|
|
79,367
|
|
|||
Weighted average limited partner units outstanding – diluted
|
99,303
|
|
|
80,603
|
|
|
79,388
|
|
|||
|
|
|
|
|
|
||||||
Cash distributions declared per unit
(f)
|
$
|
4.40
|
|
|
$
|
3.83
|
|
|
$
|
3.19
|
|
(a)
|
As discussed in Note
1
, EQM's consolidated financial statements have been retrospectively recast to include the pre-acquisition results of Allegheny Valley Connector, LLC (AVC), Rager Mountain Storage Company LLC (Rager) and certain gathering assets located in southwestern Pennsylvania and northern West Virginia (the Gathering Assets), which were acquired by EQM effective on October 1, 2016 (collectively, the October 2016 Acquisition), EQM Olympus Midstream LLC (EQM Olympus), Strike Force Midstream Holdings LLC (Strike Force) and EQM West Virginia Midstream LLC (EQM WV), which were acquired by EQM effective on May 1, 2018 (the Drop-Down Transaction), and Rice Midstream Partners LP (RMP), which was acquired by EQM effective on July 23, 2018 (the EQM-RMP Merger), because these transactions were between entities under common control at the time of acquisition.
|
(b)
|
Operating revenues included related party revenues from EQT Corporation (NYSE:EQT) (EQT) of approximately
$1.1 billion
,
$665.9 million
and
$551.4 million
for the years ended
December 31, 2018
,
2017
and
2016
, respectively. See Note
6
.
|
(c)
|
In the Successor period (defined in Note 1), operating and maintenance expense did not include any charges from Equitrans Midstream Corporation (defined in Note 1). In the Predecessor period from January 1, 2018 to November 12, 2018, and for the years ended December 31,
2017
and
2016
, operating and maintenance expense included charges from EQT of
$49.8 million
,
$40.2 million
and
$34.2 million
, respectively. In the Successor period, selling, general and administrative expense included charges from Equitrans Midstream Corporation of
$16.3 million
. In the Predecessor period from January 1, 2018 to November 12, 2018, and for the years ended December 31,
2017
and
2016
, selling, general and administrative expense included charges from EQT of
$81.7 million
,
$72.6 million
and
$67.3 million
, respectively. See Note
6
.
|
(d)
|
Represents equity income from Mountain Valley Pipeline, LLC (the MVP Joint Venture). See Note
7
.
|
(e)
|
For the years ended
December 31, 2018
,
2017
and 2016, net interest expense included interest income on
t
he preferred interest that EQM has in EQT Energy Supply, LLC (EES) (the Preferred Interest) of
$6.6 million
,
$6.8 million
and
$1.7 million
, respectively.
|
(f)
|
Represents the cash distributions declared related to the period presented. See Note
8
.
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
(Thousands)
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|
||||
Net income
|
$
|
671,348
|
|
|
$
|
610,360
|
|
|
$
|
537,954
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
||||
Depreciation
|
171,914
|
|
|
107,161
|
|
|
62,691
|
|
|||
Amortization of intangible assets
|
41,547
|
|
|
5,540
|
|
|
—
|
|
|||
Impairment of goodwill
|
261,941
|
|
|
—
|
|
|
—
|
|
|||
Deferred income taxes
|
—
|
|
|
—
|
|
|
8,774
|
|
|||
Equity income
|
(61,778
|
)
|
|
(22,171
|
)
|
|
(9,898
|
)
|
|||
AFUDC – equity
|
(5,570
|
)
|
|
(5,110
|
)
|
|
(19,402
|
)
|
|||
Non-cash long term compensation expense
|
1,275
|
|
|
242
|
|
|
195
|
|
|||
Changes in other assets and liabilities:
|
|
|
|
|
|
|
|
||||
Accounts receivable
|
(48,046
|
)
|
|
(24,583
|
)
|
|
(9,003
|
)
|
|||
Accounts payable
|
94,961
|
|
|
2,853
|
|
|
(37,890
|
)
|
|||
Other assets and other liabilities
|
59,647
|
|
|
7,556
|
|
|
4,483
|
|
|||
Net cash provided by operating activities
|
1,187,239
|
|
|
681,848
|
|
|
537,904
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
||||
Capital expenditures
|
(837,003
|
)
|
|
(380,151
|
)
|
|
(584,819
|
)
|
|||
October 2016 Acquisition from EQT (see Note 2)
|
—
|
|
|
—
|
|
|
(62,372
|
)
|
|||
Drop-Down Transaction from EQT (see Note 2)
|
(1,193,160
|
)
|
|
—
|
|
|
—
|
|
|||
Capital contributions to the MVP Joint Venture
|
(913,195
|
)
|
|
(159,550
|
)
|
|
(98,399
|
)
|
|||
(Purchase)/sale of interests in the MVP Joint Venture
|
(11,302
|
)
|
|
—
|
|
|
12,533
|
|
|||
Principal payments received on the Preferred Interest (see Note 2)
|
4,406
|
|
|
4,166
|
|
|
1,024
|
|
|||
Net cash used in investing activities
|
(2,950,254
|
)
|
|
(535,535
|
)
|
|
(732,033
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
||||
Proceeds from credit facility borrowings
|
3,427,500
|
|
|
544,000
|
|
|
740,000
|
|
|||
Payments on credit facility borrowings
|
(3,268,500
|
)
|
|
(344,000
|
)
|
|
(1,039,000
|
)
|
|||
Proceeds from the issuance of long-term debt
|
2,500,000
|
|
|
—
|
|
|
500,000
|
|
|||
Net contributions from EQT
|
3,001
|
|
|
29,711
|
|
|
20,234
|
|
|||
Acquisition of 25% of Strike Force Midstream LLC
|
(175,000
|
)
|
|
—
|
|
|
—
|
|
|||
Capital contributions
|
16,790
|
|
|
9,790
|
|
|
5,884
|
|
|||
Distributions paid to unitholders
|
(736,145
|
)
|
|
(442,229
|
)
|
|
(329,471
|
)
|
|||
Distributions paid to noncontrolling interest
|
(750
|
)
|
|
—
|
|
|
—
|
|
|||
Debt discount, debt issuance costs and credit facility origination fees
|
(40,966
|
)
|
|
(2,257
|
)
|
|
(8,580
|
)
|
|||
Proceeds from the issuance of EQM common units, net of offering costs
|
—
|
|
|
—
|
|
|
217,102
|
|
|||
October 2016 Acquisition - purchase price in excess of net assets from EQT (see Note 2)
|
—
|
|
|
—
|
|
|
(3,734
|
)
|
|||
Acquisition of AVC net assets from EQT (see Note 2)
|
—
|
|
|
—
|
|
|
(208,894
|
)
|
|||
Net cash provided by (used in) financing activities
|
1,725,930
|
|
|
(204,985
|
)
|
|
(106,459
|
)
|
|||
|
|
|
|
|
|
||||||
Net change in cash and cash equivalents
|
(37,085
|
)
|
|
(58,672
|
)
|
|
(300,588
|
)
|
|||
Cash and cash equivalents at beginning of year
(b)
|
54,600
|
|
|
113,272
|
|
|
360,956
|
|
|||
Cash and cash equivalents at end of year
|
$
|
17,515
|
|
|
$
|
54,600
|
|
|
$
|
60,368
|
|
|
|
|
|
|
|
||||||
Cash paid during the year for:
|
|
|
|
|
|
|
|
||||
Interest, net of amount capitalized
|
$
|
54,154
|
|
|
$
|
43,794
|
|
|
$
|
13,899
|
|
Non-cash activity during the year:
|
|
|
|
|
|
|
|
||||
(Decrease) increase in capital contribution receivable from EQT
|
$
|
(12,924
|
)
|
|
$
|
12,411
|
|
|
$
|
(5,283
|
)
|
Elimination of net current and deferred tax liabilities
|
—
|
|
|
—
|
|
|
93,951
|
|
|||
Asset adjustments prior to acquisition
|
—
|
|
|
—
|
|
|
(115,270
|
)
|
(a)
|
As discussed in Note 1, EQM's consolidated financial statements have been retrospectively recast to include the pre-acquisition results of the October 2016 Acquisition, the Drop-Down Transaction and the EQM-RMP Merger because these transactions were between entities under common control.
|
(b)
|
Cash and cash equivalents at beginning of year for December 31, 2017 includes
$52.9 million
of cash and cash equivalents acquired at the effective time of the Rice Merger. See Note 2.
|
|
2018
|
|
2017
|
||||
|
(Thousands, except number of units)
|
||||||
ASSETS
|
|
|
|
|
|||
Current assets:
|
|
|
|
|
|||
Cash and cash equivalents
|
$
|
17,515
|
|
|
$
|
54,600
|
|
Accounts receivable (net of allowance for doubtful accounts of $75 and $446 as of December 31, 2018 and 2017, respectively)
(b)
|
254,390
|
|
|
219,271
|
|
||
Other current assets
|
14,909
|
|
|
14,153
|
|
||
Total current assets
|
286,814
|
|
|
288,024
|
|
||
|
|
|
|
||||
Property, plant and equipment
|
6,367,530
|
|
|
5,516,504
|
|
||
Less: accumulated depreciation
|
(560,902
|
)
|
|
(405,665
|
)
|
||
Net property, plant and equipment
|
5,806,628
|
|
|
5,110,839
|
|
||
|
|
|
|
||||
Investment in unconsolidated entity
|
1,510,289
|
|
|
460,546
|
|
||
Goodwill
|
1,123,813
|
|
|
1,384,872
|
|
||
Net intangible assets
|
576,113
|
|
|
617,660
|
|
||
Other assets
|
152,464
|
|
|
136,894
|
|
||
Total assets
|
$
|
9,456,121
|
|
|
$
|
7,998,835
|
|
|
|
|
|
||||
LIABILITIES AND EQUITY
|
|
|
|
|
|||
Current liabilities:
|
|
|
|
|
|||
Accounts payable
(c)
|
$
|
207,877
|
|
|
$
|
139,190
|
|
Due to Equitrans Midstream
|
44,509
|
|
|
—
|
|
||
Capital contribution payable to the MVP Joint Venture
|
169,202
|
|
|
105,734
|
|
||
Accrued interest
|
80,199
|
|
|
11,067
|
|
||
Accrued liabilities
|
20,672
|
|
|
20,995
|
|
||
Total current liabilities
|
522,459
|
|
|
276,986
|
|
||
|
|
|
|
||||
Credit facility borrowings
|
625,000
|
|
|
466,000
|
|
||
Senior notes
|
3,456,639
|
|
|
987,352
|
|
||
Regulatory and other long-term liabilities
|
38,724
|
|
|
29,633
|
|
||
Total liabilities
|
4,642,822
|
|
|
1,759,971
|
|
||
|
|
|
|
||||
Equity:
|
|
|
|
|
|||
Predecessor equity
|
—
|
|
|
3,916,434
|
|
||
Noncontrolling interest
|
—
|
|
|
173,472
|
|
||
Common (120,457,638 and 80,581,758 units issued and outstanding at December 31, 2018 and 2017, respectively)
|
4,783,673
|
|
|
2,147,706
|
|
||
General partner (1,443,015 units issued and outstanding at December 31, 2018 and 2017)
|
29,626
|
|
|
1,252
|
|
||
Total equity
|
4,813,299
|
|
|
6,238,864
|
|
||
Total liabilities and equity
|
$
|
9,456,121
|
|
|
$
|
7,998,835
|
|
(a)
|
As discussed in Note 1, EQM's consolidated financial statements have been retrospectively recast to include the pre-acquisition results of the Drop-Down Transaction and the EQM-RMP Merger because these transactions were between entities under common control.
|
(b)
|
Accounts receivable as of December 31, 2018 and 2017 included approximately
$174.8 million
and
$158.7 million
, respectively, of related party accounts receivable from EQT.
|
(c)
|
Accounts payable as of December 31, 2018 and 2017 included approximately
$34.0 million
and
$33.9 million
, respectively, of related party accounts payable to EQT.
|
|
Predecessor
|
|
Noncontrolling
|
|
Limited Partners
|
|
General
|
|
|
||||||||||
|
Equity
|
|
Interest
|
|
Common
|
|
Partner
|
|
Total Equity
|
||||||||||
|
(Thousands)
|
||||||||||||||||||
Balance at January 1, 2016
|
$
|
275,545
|
|
|
$
|
—
|
|
|
$
|
1,598,675
|
|
|
$
|
(30,963
|
)
|
|
$
|
1,843,257
|
|
Net income
|
21,861
|
|
|
—
|
|
|
413,352
|
|
|
102,741
|
|
|
537,954
|
|
|||||
Capital contributions
|
—
|
|
|
—
|
|
|
591
|
|
|
11
|
|
|
602
|
|
|||||
Equity-based compensation plans
|
—
|
|
|
—
|
|
|
195
|
|
|
—
|
|
|
195
|
|
|||||
Net contributions from EQT
|
20,234
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,234
|
|
|||||
Distributions to unitholders
|
—
|
|
|
—
|
|
|
(241,403
|
)
|
|
(88,068
|
)
|
|
(329,471
|
)
|
|||||
Elimination of capital lease
(b)
|
(25,055
|
)
|
|
—
|
|
|
23,500
|
|
|
1,555
|
|
|
—
|
|
|||||
Proceeds from issuance of common units, net of offering costs
|
—
|
|
|
—
|
|
|
217,102
|
|
|
—
|
|
|
217,102
|
|
|||||
Elimination of net current and deferred tax liabilities
|
93,951
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
93,951
|
|
|||||
Asset adjustments prior to acquisition
(c)
|
(115,270
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(115,270
|
)
|
|||||
October 2016 Acquisition net assets from EQT
|
(271,266
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(271,266
|
)
|
|||||
Purchase price in excess of net assets from EQT
|
—
|
|
|
—
|
|
|
(3,502
|
)
|
|
(232
|
)
|
|
(3,734
|
)
|
|||||
Balance at December 31, 2016
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,008,510
|
|
|
$
|
(14,956
|
)
|
|
$
|
1,993,554
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income
|
37,722
|
|
|
734
|
|
|
418,313
|
|
|
153,591
|
|
|
610,360
|
|
|||||
EQT Acquisition of EQM Olympus, Strike Force, and EQM WV
|
1,349,316
|
|
|
166,000
|
|
|
—
|
|
|
—
|
|
|
1,515,316
|
|
|||||
EQT Acquisition of RMP
|
2,499,668
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,499,668
|
|
|||||
Capital contributions
|
—
|
|
|
—
|
|
|
15,184
|
|
|
279
|
|
|
15,463
|
|
|||||
Equity-based compensation plans
|
17
|
|
|
—
|
|
|
225
|
|
|
—
|
|
|
242
|
|
|||||
Net contributions from EQT, net of distributions
|
29,711
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,711
|
|
|||||
Net contributions from noncontrolling interest, net of distributions
|
—
|
|
|
6,738
|
|
|
—
|
|
|
—
|
|
|
6,738
|
|
|||||
Distributions to unitholders
|
—
|
|
|
—
|
|
|
(294,526
|
)
|
|
(137,662
|
)
|
|
(432,188
|
)
|
|||||
Balance at December 31, 2017
|
$
|
3,916,434
|
|
|
$
|
173,472
|
|
|
$
|
2,147,706
|
|
|
$
|
1,252
|
|
|
$
|
6,238,864
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income
|
164,242
|
|
|
3,346
|
|
|
241,729
|
|
|
262,031
|
|
|
671,348
|
|
|||||
Capital contributions
|
—
|
|
|
—
|
|
|
3,801
|
|
|
65
|
|
|
3,866
|
|
|||||
Equity-based compensation plans
|
922
|
|
|
—
|
|
|
353
|
|
|
—
|
|
|
1,275
|
|
|||||
Net contributions from EQT / to Equitrans Midstream
|
3,660
|
|
|
—
|
|
|
(659
|
)
|
|
—
|
|
|
3,001
|
|
|||||
Distributions to unitholders
|
(68,390
|
)
|
|
—
|
|
|
(434,033
|
)
|
|
(233,722
|
)
|
|
(736,145
|
)
|
|||||
Distributions paid to noncontrolling interest
|
—
|
|
|
(750
|
)
|
|
—
|
|
|
—
|
|
|
(750
|
)
|
|||||
Acquisition of 25% of Strike Force Midstream LLC
|
—
|
|
|
(176,068
|
)
|
|
1,068
|
|
|
—
|
|
|
(175,000
|
)
|
|||||
Drop-Down Transaction from EQT
|
(1,436,297
|
)
|
|
—
|
|
|
243,137
|
|
|
—
|
|
|
(1,193,160
|
)
|
|||||
EQM-RMP Merger
|
(2,580,571
|
)
|
|
—
|
|
|
2,580,571
|
|
|
—
|
|
|
—
|
|
|||||
Balance at December 31, 2018
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,783,673
|
|
|
$
|
29,626
|
|
|
$
|
4,813,299
|
|
(a)
|
As discussed in Note 1, EQM's consolidated financial statements have been retrospectively recast to include the pre-acquisition results of the October 2016 Acquisition, the Drop-Down Transaction and the EQM-RMP Merger because these transactions were between entities under common control.
|
(b)
|
Reflects the elimination of the historical capital lease depreciation expense as described in Note 2.
|
(c)
|
Represents a decrease in the carrying value of the Gathering Assets and regulatory assets on the books of AVC, Rager, and the Gathering Assets by EQT prior to the October 2016 Acquisition.
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(Thousands)
|
||||||
Gathering assets
|
|
$
|
4,387,908
|
|
|
$
|
3,642,937
|
|
Accumulated depreciation
|
|
(247,720
|
)
|
|
(153,791
|
)
|
||
Net gathering assets
|
|
4,140,188
|
|
|
3,489,146
|
|
||
Transmission and storage assets
|
|
1,785,157
|
|
|
1,674,080
|
|
||
Accumulated depreciation
|
|
(286,693
|
)
|
|
(248,474
|
)
|
||
Net transmission and storage assets
|
|
1,498,464
|
|
|
1,425,606
|
|
||
Water services assets
|
|
194,465
|
|
|
193,825
|
|
||
Accumulated depreciation
|
|
(26,489
|
)
|
|
(3,363
|
)
|
||
Net water services assets
|
|
167,976
|
|
|
190,462
|
|
||
Net other property, plant and equipment
|
|
—
|
|
|
5,625
|
|
||
Net property, plant and equipment
|
|
$
|
5,806,628
|
|
|
$
|
5,110,839
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
(Thousands)
|
||||||
Intangible assets
|
$
|
623,200
|
|
|
$
|
623,200
|
|
Less: accumulated amortization
|
(47,087
|
)
|
|
(5,540
|
)
|
||
Intangible assets, net
|
$
|
576,113
|
|
|
$
|
617,660
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(Thousands)
|
||||||
AROs at beginning of period
|
$
|
9,321
|
|
|
$
|
—
|
|
Liabilities assumed at Rice Merger
|
—
|
|
|
9,286
|
|
||
Liabilities incurred
|
231
|
|
|
—
|
|
||
Revisions to estimated liabilities
(a)
|
1,928
|
|
|
—
|
|
||
Accretion expense
|
455
|
|
|
35
|
|
||
AROs at end of period
|
$
|
11,935
|
|
|
$
|
9,321
|
|
(a)
|
Revisions to estimated liabilities reflect changes in retirement cost assumptions and to the estimated timing of liability settlement.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(Thousands)
|
||||||||||
Operating revenues
|
$
|
393,911
|
|
|
$
|
383,309
|
|
|
$
|
343,978
|
|
Operating expenses
|
$
|
140,832
|
|
|
$
|
143,614
|
|
|
$
|
114,978
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(Thousands)
|
||||||
Property, plant and equipment
|
$
|
1,900,411
|
|
|
$
|
1,787,656
|
|
Accumulated depreciation
|
(317,988
|
)
|
|
(278,756
|
)
|
||
Net property, plant and equipment
|
$
|
1,582,423
|
|
|
$
|
1,508,900
|
|
|
|
Goodwill and Purchase Price Allocation
|
||
|
|
(Thousands)
|
||
Estimated fair value of RMP, EQM Olympus, Strike Force and EQM WV
(a)
|
|
$
|
4,014,984
|
|
|
|
|
||
Estimated Fair Value of Assets Acquired and Liabilities Assumed:
|
|
|
||
Current assets
(b)
|
|
132,459
|
|
|
Intangible assets
(c)
|
|
623,200
|
|
|
Property and equipment, net
(d)
|
|
2,265,900
|
|
|
Other non-current assets
|
|
118
|
|
|
Current liabilities
(b)
|
|
(117,124
|
)
|
|
RMP $850 Million Facility
(e)
|
|
(266,000
|
)
|
|
Other non-current liabilities
(e)
|
|
(9,323
|
)
|
|
Total estimated fair value of assets acquired and liabilities assumed
|
|
2,629,230
|
|
|
Goodwill as of November 13, 2017
(f)
|
|
1,385,754
|
|
|
Impairment of goodwill
|
|
261,941
|
|
|
Goodwill as of December 31, 2018
|
|
$
|
1,123,813
|
|
(a)
|
Includes the estimated fair value attributable to noncontrolling interest of
$166 million
.
|
(b)
|
The fair value of current assets and current liabilities were assumed to approximate their carrying values.
|
(c)
|
The identifiable intangible assets for customer relationships were estimated by applying a discounted cash flow approach which was adjusted for customer attrition assumptions and projected market conditions.
|
(d)
|
The estimated fair value of long-lived property and equipment were determined utilizing estimated replacement cost adjusted for a usage or obsolescence factor.
|
(e)
|
The estimated fair value of long-term liabilities was determined utilizing observable market inputs where available or estimated based on their then current carrying values.
|
(f)
|
Reflected the value of perceived growth opportunities, synergies and operating leverage anticipated through the acquisition and ownership of the acquired gathering assets as of November 13, 2017.
|
|
Years Ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(Thousands)
|
||||||
Pro forma operating revenues
|
$
|
1,264,704
|
|
|
$
|
997,829
|
|
Pro forma net income
|
781,273
|
|
|
591,616
|
|
||
Pro forma net income (loss) attributable to noncontrolling interests
|
8,144
|
|
|
(4,588
|
)
|
||
Pro forma net income attributable to EQM
|
773,129
|
|
|
596,204
|
|
3
.
|
Revenue from Contracts with Customers
|
|
|
Year Ended December 31, 2018
|
||||||||||||||
|
|
Gathering
|
|
Transmission
|
|
Water
|
|
Total
|
||||||||
|
|
(Thousands)
|
||||||||||||||
Firm reservation fee revenues
|
|
$
|
447,360
|
|
|
$
|
356,725
|
|
|
$
|
—
|
|
|
$
|
804,085
|
|
Volumetric-based fee revenues
|
|
549,710
|
|
|
30,076
|
|
|
—
|
|
|
579,786
|
|
||||
Water service revenues
|
|
—
|
|
|
—
|
|
|
111,227
|
|
|
111,227
|
|
||||
Total operating revenues
|
|
$
|
997,070
|
|
|
$
|
386,801
|
|
|
$
|
111,227
|
|
|
$
|
1,495,098
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Year Ended December 31, 2017
|
||||||||||||||
|
|
Gathering
|
|
Transmission
|
|
Water
|
|
Total
|
||||||||
|
|
(Thousands)
|
||||||||||||||
Firm reservation fee revenues
|
|
$
|
407,355
|
|
|
$
|
348,193
|
|
|
$
|
—
|
|
|
$
|
755,548
|
|
Volumetric-based fee revenues
|
|
102,612
|
|
|
23,793
|
|
|
—
|
|
|
126,405
|
|
||||
Water service revenues
|
|
—
|
|
|
—
|
|
|
13,605
|
|
|
13,605
|
|
||||
Total operating revenues
|
|
$
|
509,967
|
|
|
$
|
371,986
|
|
|
$
|
13,605
|
|
|
$
|
895,558
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Year Ended December 31, 2016
|
||||||||||||||
|
|
Gathering
|
|
Transmission
|
|
Water
|
|
Total
|
||||||||
|
|
(Thousands)
|
||||||||||||||
Firm reservation fee revenues
|
|
$
|
339,237
|
|
|
$
|
277,816
|
|
|
$
|
—
|
|
|
$
|
617,053
|
|
Volumetric-based fee revenues
|
|
58,257
|
|
|
56,962
|
|
|
—
|
|
|
115,219
|
|
||||
Water service revenues
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total operating revenues
|
|
$
|
397,494
|
|
|
$
|
334,778
|
|
|
$
|
—
|
|
|
$
|
732,272
|
|
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
|
Total
|
||||||||||||||
|
(Thousands)
|
|||||||||||||||||||||||||||
Gathering firm reservation fees
|
|
$
|
476,709
|
|
|
$
|
552,636
|
|
|
$
|
562,635
|
|
|
$
|
562,635
|
|
|
$
|
562,635
|
|
|
$
|
2,273,123
|
|
|
$
|
4,990,373
|
|
Gathering revenues supported by MVCs
|
|
65,700
|
|
|
71,370
|
|
|
71,175
|
|
|
71,175
|
|
|
71,175
|
|
|
65,700
|
|
|
416,295
|
|
|||||||
Transmission firm reservation fees
|
|
351,028
|
|
|
343,984
|
|
|
340,218
|
|
|
335,137
|
|
|
295,243
|
|
|
2,178,736
|
|
|
3,844,346
|
|
|||||||
Total
|
|
$
|
893,437
|
|
|
$
|
967,990
|
|
|
$
|
974,028
|
|
|
$
|
968,947
|
|
|
$
|
929,053
|
|
|
$
|
4,517,559
|
|
|
$
|
9,251,014
|
|
|
|
Limited Partner
|
|
General
|
|
|
|||
|
|
Common Units
|
|
Partner Units
|
|
Total
|
|||
Balance at January 1, 2016
|
|
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
|
|
$750 Million At the Market Program
(a)
|
|
2,949,309
|
|
|
—
|
|
|
2,949,309
|
|
Balance at December 31, 2016 and 2017
(b)
|
|
80,581,758
|
|
|
1,443,015
|
|
|
82,024,773
|
|
Common units issued
(c)
|
|
10,821
|
|
|
—
|
|
|
10,821
|
|
Drop-Down Transaction consideration(d)
|
|
5,889,282
|
|
|
—
|
|
|
5,889,282
|
|
Common units issued with the EQM-RMP Merger
(e)
|
|
33,975,777
|
|
|
—
|
|
|
33,975,777
|
|
Balance at December 31, 2018
|
|
120,457,638
|
|
|
1,443,015
|
|
|
121,900,653
|
|
(a)
|
During the third quarter of 2015, EQM entered into an equity distribution agreement that established an ATM common unit offering program, pursuant to which a group of managers acting as EQM's sales agents could sell EQM common units having an aggregate offering price of up to
$750 million
(the
$750 million
ATM Program). The price per unit represents an average price for all issuances under the
$750 million
ATM Program in 2016. The underwriters' discount and other offering expenses in the table above include commissions of approximately
$2.2 million
. EQM used the net proceeds for general partnership purposes. The
$750 million
ATM program expired in the third quarter of 2018.
|
(b)
|
There were no issuances in 2017.
|
(c)
|
Units issued upon the resignation of a member of EQM General Partner's Board of Directors.
|
(d)
|
In May 2018, EQM completed the Drop-Down Transaction in exchange for an aggregate of
5,889,282
EQM common units and aggregate cash consideration of
$1.15 billion
, subject to working capital adjustments. See Note
2
for further information.
|
(e)
|
In July 2018, EQM completed the EQM-RMP Merger. The aggregate Merger Consideration consisted of approximately
34 million
EQM common units of which
9,544,530
EQM common units were received by an indirect wholly owned subsidiary of EQT. See Note
2
for further information.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(Thousands)
|
||||||||||
Revenues from external customers (including affiliates):
|
|
|
|
|
|
|
|
||||
Gathering
|
$
|
997,070
|
|
|
$
|
509,967
|
|
|
$
|
397,494
|
|
Transmission
|
386,801
|
|
|
371,986
|
|
|
334,778
|
|
|||
Water
|
111,227
|
|
|
13,605
|
|
|
—
|
|
|||
Total operating revenues
|
$
|
1,495,098
|
|
|
$
|
895,558
|
|
|
$
|
732,272
|
|
Operating income:
|
|
|
|
|
|
|
|
||||
Gathering
(a)
|
$
|
423,407
|
|
|
$
|
369,093
|
|
|
$
|
289,643
|
|
Transmission
|
265,579
|
|
|
247,467
|
|
|
238,213
|
|
|||
Water
|
37,667
|
|
|
4,145
|
|
|
—
|
|
|||
Total operating income
|
$
|
726,653
|
|
|
$
|
620,705
|
|
|
$
|
527,856
|
|
|
|
|
|
|
|
||||||
Reconciliation of operating income to net income:
|
|
|
|
|
|
||||||
Equity income
(b)
|
61,778
|
|
|
22,171
|
|
|
9,898
|
|
|||
Other income
|
5,011
|
|
|
4,439
|
|
|
27,113
|
|
|||
Net interest expense
|
122,094
|
|
|
36,955
|
|
|
16,766
|
|
|||
Income tax expense
|
—
|
|
|
—
|
|
|
10,147
|
|
|||
Net income
|
$
|
671,348
|
|
|
$
|
610,360
|
|
|
$
|
537,954
|
|
(a)
|
Impairment of goodwill of
$261.9 million
was included in Gathering operating income for 2018. See Note 1 for further information.
|
(b)
|
Equity income is included in the Transmission segment.
|
|
As of December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(Thousands)
|
||||||||||
Segment assets:
|
|
|
|
|
|
|
|
||||
Gathering
|
$
|
6,011,654
|
|
|
$
|
5,656,094
|
|
|
$
|
1,292,713
|
|
Transmission
(a)
|
3,066,659
|
|
|
1,947,566
|
|
|
1,413,631
|
|
|||
Water
|
237,602
|
|
|
208,273
|
|
|
—
|
|
|||
Total operating segments
|
9,315,915
|
|
|
7,811,933
|
|
|
2,706,344
|
|
|||
Headquarters, including cash
|
140,206
|
|
|
186,902
|
|
|
369,496
|
|
|||
Total assets
|
$
|
9,456,121
|
|
|
$
|
7,998,835
|
|
|
$
|
3,075,840
|
|
(a)
|
For the year ended December 31, 2018, the equity investment in the MVP Joint Venture is included in the Transmission segment. For the years ended December 31, 2017 and 2016, the equity investment in the MVP Joint Venture was included in the headquarters segment. The prior period amounts have been recast to conform to current presentation.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(Thousands)
|
||||||||||
Depreciation:
|
|
|
|
|
|
|
|
||||
Gathering
|
$
|
98,678
|
|
|
$
|
44,957
|
|
|
$
|
30,422
|
|
Transmission
|
49,723
|
|
|
58,689
|
|
|
32,269
|
|
|||
Water
|
23,513
|
|
|
3,515
|
|
|
—
|
|
|||
Total
|
$
|
171,914
|
|
|
$
|
107,161
|
|
|
$
|
62,691
|
|
Expenditures for segment assets:
|
|
|
|
|
|
|
|
||||
Gathering
|
$
|
717,251
|
|
|
$
|
254,522
|
|
|
$
|
295,315
|
|
Transmission
|
114,450
|
|
|
111,102
|
|
|
292,049
|
|
|||
Water
|
23,537
|
|
|
6,233
|
|
|
—
|
|
|||
Total
(a)
|
$
|
855,238
|
|
|
$
|
371,857
|
|
|
$
|
587,364
|
|
(a)
|
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
$108.9 million
,
$90.7 million
,
$26.7 million
and
$24.1 million
at
December 31, 2018
,
2017
,
2016
and
2015
, respectively. On November 13, 2017, as a result of the Rice Merger, EQM assumed
$72.3 million
of Rice Midstream Holdings accrued capital expenditures.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(Thousands)
|
||||||||||
Reimbursements to EQT
|
|
|
|
|
|
|
|
||||
Operating and maintenance expense
(a)
|
$
|
49,778
|
|
|
$
|
39,957
|
|
|
$
|
33,526
|
|
Selling, general and administrative expense
(a)
|
$
|
81,725
|
|
|
$
|
67,424
|
|
|
$
|
63,255
|
|
|
|
|
|
|
|
||||||
Reimbursements to Equitrans Midstream
|
|
|
|
|
|
|
|
||||
Operating and maintenance expense
(a)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Selling, general and administrative expense
(a)
|
$
|
16,335
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Reimbursements from EQT
(b)
|
|
|
|
|
|
|
|
||||
Plugging and abandonment
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
195
|
|
Bare steel replacement
|
$
|
3,866
|
|
|
$
|
15,704
|
|
|
$
|
—
|
|
Other capital reimbursements
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
162
|
|
(a)
|
The expenses for which EQM reimbursed EQT and its subsidiaries in the Predecessor Period and Equitrans Midstream and its subsidiaries in the Successor Period may not necessarily reflect the actual expenses that EQM would incur on a stand-alone basis, and EQM is unable to estimate what those expenses would be on a stand-alone basis. These amounts exclude the recast impact of the October 2016 Acquisition, the Drop-Down Transaction and the EQM-RMP Merger as these amounts do not represent reimbursements pursuant to any omnibus agreement.
|
(b)
|
These reimbursements were recorded as capital contributions from EQT. There were no reimbursements from Equitrans Midstream in the Successor period.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(Thousands)
|
||||||||||
Operating revenues
(a)
|
$
|
1,111,289
|
|
|
$
|
665,939
|
|
|
$
|
551,353
|
|
Operating and maintenance expense
(b)
|
49,778
|
|
|
40,204
|
|
|
34,179
|
|
|||
Selling, general and administrative expense
(b)
|
98,060
|
|
|
72,592
|
|
|
67,345
|
|
|||
Transaction costs
(c)
|
7,761
|
|
|
—
|
|
|
—
|
|
|||
Equity income
|
61,778
|
|
|
22,171
|
|
|
9,898
|
|
|||
Other income from Preferred Interest
|
—
|
|
|
—
|
|
|
8,293
|
|
|||
Interest income on Preferred Interest (see Note 1)
|
6,578
|
|
|
6,818
|
|
|
1,740
|
|
|||
Principal payments received on Preferred Interest (see Note 1)
|
4,406
|
|
|
4,166
|
|
|
1,024
|
|
|||
Distributions to EQM General Partner
(d)
|
361,575
|
|
|
235,167
|
|
|
169,438
|
|
|||
Capital contributions from EQT
|
3,866
|
|
|
15,463
|
|
|
602
|
|
|||
Net contributions from/(distributions to) EQT
|
$
|
3,001
|
|
|
$
|
29,711
|
|
|
$
|
20,234
|
|
(a)
|
2018 operating revenues represents revenues with EQT for all years presented.
|
(b)
|
The expenses for which EQM reimbursed EQT and its subsidiaries in the Predecessor period and Equitrans Midstream and its subsidiaries in the Successor period may not necessarily reflect the actual expenses that EQM would incur on a stand-alone basis, and EQM is unable to estimate what those expenses would be on a stand-alone basis. These amounts exclude the recast impact of the October 2016 Acquisition, the Drop-Down Transaction and the EQM-RMP Merger as these amounts do not represent reimbursements pursuant to the omnibus agreement.
|
(c)
|
For the year ended December 31, 2018, EQT allocated
$7.8 million
in transaction costs to EQM related to the EQM-RMP Merger and the Drop-Down Transaction.
|
(d)
|
The distributions to the EQM General Partner are based on the period to which the distributions relate and not the period in which the distributions were declared and paid. For example, for the year ended
December 31, 2018
, total distributions to the EQM General Partner included the cash distribution declared on
January 16, 2019
related to the fourth quarter of
2018
of
$1.13
per common unit and the amounts related to its general partner interest and IDRs.
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(Thousands)
|
||||||
Accounts receivable – related party
|
$
|
174,767
|
|
|
$
|
158,720
|
|
Due to related party
|
78,465
|
|
|
33,919
|
|
||
Investment in unconsolidated entity
|
1,510,289
|
|
|
460,546
|
|
||
Preferred Interest in EES (see Note 1 and Note 7)
|
$
|
114,720
|
|
|
$
|
119,127
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(Thousands)
|
||||||
Current assets
|
$
|
687,657
|
|
|
$
|
330,271
|
|
Noncurrent assets
|
3,223,220
|
|
|
747,728
|
|
||
Total assets
|
$
|
3,910,877
|
|
|
$
|
1,077,999
|
|
|
|
|
|
||||
Current liabilities
|
$
|
617,355
|
|
|
$
|
65,811
|
|
Equity
|
3,293,522
|
|
|
1,012,188
|
|
||
Total liabilities and equity
|
$
|
3,910,877
|
|
|
$
|
1,077,999
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(Thousands)
|
||||||||||
AFUDC - equity
|
$
|
91,056
|
|
|
$
|
32,054
|
|
|
$
|
16,315
|
|
Net interest income
|
44,786
|
|
|
16,674
|
|
|
5,206
|
|
|||
Net income
|
$
|
135,842
|
|
|
$
|
48,728
|
|
|
$
|
21,521
|
|
|
|
Total Quarterly
Distribution per |
|
Marginal Percentage Interest in
Distributions
|
||
|
|
Unit Target Amount
|
|
Unitholders
|
|
General Partner
|
Minimum Quarterly Distribution
|
|
$0.35
|
|
98.2%
|
|
1.8%
|
First Target Distribution
|
|
Above $0.3500 up to $0.4025
|
|
98.2%
|
|
1.8%
|
Second Target Distribution
|
|
Above $0.4025 up to $0.4375
|
|
85.2%
|
|
14.8%
|
Third Target Distribution
|
|
Above $0.4375 up to $0.5250
|
|
75.2%
|
|
24.8%
|
Thereafter
|
|
Above $0.5250
|
|
50.2%
|
|
49.8%
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
|
Principal
|
|
Carrying Value
(a)
|
|
Fair
Value (b) |
|
Principal
|
|
Carrying Value
(a)
|
|
Fair
Value (b) |
||||||||||||
|
|
(Thousands)
|
||||||||||||||||||||||
$3 Billion Facility
|
|
$
|
625,000
|
|
|
$
|
625,000
|
|
|
$
|
625,000
|
|
|
$
|
180,000
|
|
|
$
|
180,000
|
|
|
$
|
180,000
|
|
RMP $850 Million Facility
|
|
—
|
|
|
—
|
|
|
—
|
|
|
286,000
|
|
|
286,000
|
|
|
286,000
|
|
||||||
4.00% Senior Notes due 2024
|
|
500,000
|
|
|
495,708
|
|
|
479,950
|
|
|
500,000
|
|
|
494,939
|
|
|
504,110
|
|
||||||
4.125% Senior Notes due 2026
|
|
500,000
|
|
|
493,264
|
|
|
454,200
|
|
|
500,000
|
|
|
492,413
|
|
|
501,990
|
|
||||||
4.75% Senior Notes due 2023
|
|
1,100,000
|
|
|
1,089,742
|
|
|
1,099,890
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
5.50% Senior Notes due 2028
|
|
850,000
|
|
|
839,302
|
|
|
841,526
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
6.50% Senior Notes due 2048
|
|
550,000
|
|
|
538,623
|
|
|
549,566
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total debt
|
|
$
|
4,125,000
|
|
|
$
|
4,081,639
|
|
|
$
|
4,050,132
|
|
|
$
|
1,466,000
|
|
|
$
|
1,453,352
|
|
|
$
|
1,472,100
|
|
(a)
|
Carrying value of the senior notes represents principal amount less unamortized debt issuance costs and debt discounts.
|
(b)
|
See Note
1
for a discussion of fair value measurements.
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(Thousands)
|
||||||
Regulatory assets:
|
|
|
|
|
|||
Deferred taxes
(a)
|
$
|
12,232
|
|
|
$
|
13,076
|
|
Other recoverable costs
(b)
|
4,312
|
|
|
4,754
|
|
||
Total regulatory assets
|
$
|
16,544
|
|
|
$
|
17,830
|
|
|
|
|
|
||||
Regulatory liabilities:
|
|
|
|
||||
Deferred taxes
(a)
|
$
|
10,119
|
|
|
$
|
10,488
|
|
On-going post-retirement benefits other than pensions
(c)
|
10,132
|
|
|
7,724
|
|
||
Other reimbursable costs
|
1,082
|
|
|
860
|
|
||
Total regulatory liabilities
|
$
|
21,333
|
|
|
$
|
19,072
|
|
(a)
|
The regulatory asset for deferred taxes primarily related to deferred income taxes recoverable through future rates on a historical deferred tax position and the equity component of AFUDC. The regulatory liability for deferred taxes relates to a revaluation of the historical difference between the regulatory and tax bases of regulated property, plant and equipment. EQM expects to recover the amortization of the deferred tax positions ratably over the corresponding life of the underlying assets that created the differences. Taxes on the equity component of AFUDC and the offsetting deferred income taxes will be collected through rates over the depreciable lives of the long-lived assets to which they relate.
|
(b)
|
Regulatory assets associated with other recoverable costs primarily related to the costs associated with the pension termination discussed in Note
15
.
|
(c)
|
EQM defers expenses for on-going post-retirement benefits other than pensions which are subject to recovery in approved rates. The regulatory liability reflects lower cumulative actuarial expenses than the amounts recovered through rates.
|
|
|
Three Months Ended
|
||||||||||||||
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
(c)
|
||||||||
|
|
(Thousands, except per unit amounts)
|
||||||||||||||
2018
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating revenues
|
|
$
|
371,026
|
|
|
$
|
374,697
|
|
|
$
|
364,584
|
|
|
$
|
384,791
|
|
Operating income (loss)
|
|
265,798
|
|
|
245,868
|
|
|
233,500
|
|
|
(18,513
|
)
|
||||
Net income (loss)
|
|
262,843
|
|
|
234,685
|
|
|
209,927
|
|
|
(36,107
|
)
|
||||
Net income (loss) attributable to EQM
|
|
$
|
260,350
|
|
|
$
|
233,832
|
|
|
$
|
209,927
|
|
|
$
|
(36,107
|
)
|
Net income (loss) per limited partner unit:
(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic and diluted
|
|
$
|
1.61
|
|
|
$
|
1.09
|
|
|
$
|
1.14
|
|
|
$
|
(0.90
|
)
|
2017
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating revenues
|
|
$
|
203,426
|
|
|
$
|
198,966
|
|
|
$
|
207,193
|
|
|
$
|
285,973
|
|
Operating income
|
|
145,113
|
|
|
141,092
|
|
|
145,506
|
|
|
188,994
|
|
||||
Net income
|
|
143,196
|
|
|
139,139
|
|
|
142,938
|
|
|
185,087
|
|
||||
Net income attributable to EQM
|
|
$
|
143,196
|
|
|
$
|
139,139
|
|
|
$
|
142,938
|
|
|
$
|
184,353
|
|
Net income per limited partner unit:
(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic and diluted
|
|
$
|
1.36
|
|
|
$
|
1.27
|
|
|
$
|
1.28
|
|
|
$
|
1.28
|
|
(a)
|
As discussed in Note 1, EQM's consolidated financial statements have been retrospectively recast to include the pre-acquisition results of the Drop-Down Transaction and the EQM-RMP Merger because these transactions were between entities under common control.
|
(b)
|
Quarterly net income (loss) per limited partner unit amounts are stand-alone calculations and may not be additive to full-year amounts due to rounding and changes in outstanding units.
|
(c)
|
During the three months ended December 31, 2018, EQM recognized an impairment to goodwill of
$261.9 million
. Refer to Note 1 for further information.
|
Name
|
|
Age
|
|
Position with EQM Midstream Services, LLC
|
M.A. Bryson
|
|
72
|
|
Director (independent)
|
K.M. Burke
|
|
69
|
|
Director (independent)
|
D.M. Charletta
|
|
46
|
|
Director, Executive Vice President and Chief Operating Officer
|
R.J. Cooper
|
|
57
|
|
Director
|
T.F. Karam
|
|
60
|
|
Chairman, President and Chief Executive Officer
|
K.R. Oliver
|
|
61
|
|
Director, Senior Vice President and Chief Financial Officer
|
P.D. Swisher
|
|
46
|
|
Vice President and Chief Accounting Officer
|
L.E. Washington
|
|
51
|
|
Director (independent)
|
•
|
Thomas F. Karam, Chairman, President and Chief Executive Officer;
|
•
|
Kirk R. Oliver, Senior Vice President and Chief Financial Officer;
|
•
|
Diana M. Charletta, Executive Vice President and Chief Operating Officer;
|
•
|
Phillip D. Swisher, Vice President and Chief Accounting Officer;
|
•
|
Steven T. Schlotterbeck, Former President and Chief Executive Officer;
|
•
|
Robert J. McNally, Former Senior Vice President and Chief Financial Officer;
|
•
|
Jeremiah J. Ashcroft, III, Former President and Chief Executive Officer and Former Senior Vice President and Chief Operating Officer; and
|
•
|
Jimmi Sue Smith, Former Chief Accounting Officer.
|
Name
|
Title
|
Base Salary
|
Thomas F. Karam
|
President and Chief Executive Officer
|
$675,000
|
Kirk R. Oliver
|
Senior Vice President and Chief Financial Officer
|
$500,000
|
Diana M. Charletta
|
Executive Vice President and Chief Operating Officer
|
$400,000
|
Phillip D. Swisher
|
Vice President and Chief Accounting Officer
|
$224,000
|
2018 Annual Incentive Award Payout
|
2018 Executive Team
Performance Highlights
|
|
Thomas F. Karam
|
$267,000
|
• Successful integration of Rice Energy Inc. midstream assets
• Consummation of the merger of EQM Midstream Partners, LP and Rice Midstream Partners LP
• Equitrans Midstream’s successful acquisition of EQGP Holdings, LP and related financing
• Successful execution of EQM’s $2.5 billion senior notes offering and $2 billion upsize of EQM’s revolving credit facility
• Reduction of gathering unit cost rate 2% more than business plan
• Achievement of 98% availability for compression equipment
|
Kirk R. Oliver
|
$20,000
|
|
Diana M. Charletta
|
$321,040
|
|
Phillip D. Swisher
|
$151,081
|
Name
|
EQT LTIP Award
|
||||
Restricted Shares
|
Restricted Stock Units
|
SIA Restricted Stock Units
|
IPSUP Perf. Share Units
|
Value Driver Perf. Share Units
|
|
Thomas F. Karam
|
59,340
|
—
|
—
|
—
|
—
|
Kirk R. Oliver
|
—
|
8,710
|
—
|
—
|
—
|
Diana M. Charletta
|
—
|
2,070
|
—
|
2,070
|
4,140
|
Phillip D. Swisher
|
—
|
550
|
650
|
550
|
1,100
|
Relative TSR (50%)
|
»
|
Measures total shareholder return relative to EQT’s 2018 peer group of companies over the performance period.
|
Operating Efficiency (25%)
|
»
|
Measures the company’s efficiency in operating expenses over the performance period.
|
Development Efficiency (25%)
|
»
|
Measures the company’s efficiency in capital spending on wells SPUD and turned-in-line over the performance period.
|
Return on Capital Employed
(may modify performance on all other metrics by up to 10%)
|
»
|
Measures the company’s return over the performance period.
|
Name
|
Cash
|
RSUs
|
Phillip D. Swisher
|
$16,667
|
650
|
NAME AND PRINCIPAL POSITION (1)
|
YEAR
|
SALARY
|
BONUS
|
STOCK AWARDS
|
OPTION AWARDS
|
NON-EQUITY
INCENTIVE PLAN
COMPENSATION
|
ALL OTHER
COMPENSATION
|
TOTAL
|
||||||||||||
|
($)
|
($) (2)
|
($) (3)
|
($) (4)
|
($)(5)
|
($) (6)
|
($)
|
|||||||||||||
T. F. Karam
President and Chief Executive Officer
|
2018
|
212,308
|
|
267,000
|
|
3,000,230
|
|
—
|
|
—
|
|
|
15,508
|
|
3,495,046
|
|
||||
2017
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|||||
2016
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|||||
K. R. Oliver
Senior Vice President and Chief Financial Officer
|
2018
|
134,616
|
|
20,000
|
|
405,538
|
|
—
|
|
—
|
|
|
9,808
|
|
569,962
|
|
||||
2017
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|||||
2016
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|||||
D. M. Charletta
Executive Vice President and Chief Operating Officer
|
2018
|
283,167
|
|
321,040
|
|
510,890
|
|
—
|
|
—
|
|
|
24,750
|
|
1,139,847
|
|
||||
2017
|
270,150
|
|
—
|
|
499,170
|
|
—
|
|
220,900
|
|
|
35,716
|
|
1,025,936
|
|
|||||
2016
|
262,101
|
|
—
|
|
411,151
|
|
|
218,000
|
|
|
30,615
|
|
921,857
|
|
||||||
P. D. Swisher
Vice President and Chief Accounting Officer
|
2018
|
203,462
|
|
151,081
|
|
166,892
|
|
—
|
|
16,667
|
|
|
18,312
|
|
556,414
|
|
||||
2017
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|||||
2016
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|||||
S.T. Schlotterbeck
Former President and Chief Executive Officer
|
2018
|
146,954
|
|
—
|
|
6,825,684
|
|
1,669,815
|
|
—
|
|
|
449
|
|
8,642,902
|
|
||||
2017
|
703,945
|
|
—
|
|
4,208,670
|
|
1,042,944
|
|
2,000,000
|
|
|
250,926
|
|
8,206,485
|
|
|||||
2016
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|||||
R.J. McNally
Former Senior Vice President and Chief Financial Officer
|
2018
|
397,336
|
|
—
|
|
3,004,011
|
|
618,678
|
|
250,000
|
|
|
44,792
|
|
4,314,817
|
|
||||
2017
|
466,238
|
|
—
|
|
2,072,314
|
|
511,108
|
|
725,000
|
|
|
223,157
|
|
3,997,817
|
|
|||||
2016
|
323,550
|
|
500,000
|
|
3,008,725
|
|
692,265
|
|
660,000
|
|
|
53,837
|
|
5,238,377
|
|
|||||
J. J. Ashcroft III
Former President and Chief Executive Officer
|
2018
|
354,330
|
|
—
|
|
2,730,454
|
|
644,841
|
|
50,000
|
|
|
2,407,948
|
|
6,187,573
|
|
||||
2017
|
194,202
|
|
500,000
|
|
2,150,498
|
|
—
|
|
—
|
|
|
49,222
|
|
2,893,922
|
|
|||||
2016
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|||||
J. S. Smith
Former Chief Accounting Officer
|
2018
|
231,372
|
|
—
|
|
490,399
|
|
104,652
|
|
33,333
|
|
|
913
|
|
860,669
|
|
||||
2017
|
242,249
|
|
—
|
|
403,698
|
|
—
|
|
250,000
|
|
|
28,594
|
|
924,541
|
|
|||||
2016
|
214,298
|
|
—
|
|
299,280
|
|
—
|
|
230,000
|
|
|
29,696
|
|
773,547
|
|
(1)
|
Steven T. Schlotterbeck was the principal executive officer through March 15, 2018. Jeremiah J. Ashcroft III was the Senior Vice President and Chief Operating Officer from January 1, 2018 through March 15, 2018 and was the principal executive officer from March 16, 2018 through August 8, 2018.
Mr. McNally and Ms. Smith remained with EQT following the Separation and were not employed by Equitrans Midstream or any other affiliate of EQM as of December 31, 2018.
|
||||||||
(2)
|
The amounts for 2018 in this column reflect the performance bonuses earned by each named executive officer pursuant to the terms of the EQT Corporation 2018 Short Term Incentive Plan with respect to performance during the year ended December 31, 2018. These awards will be paid to the named executive officers in cash in the first quarter of 2019. See “Annual Incentives” in the Compensation Discussion and Analysis above for further discussion of the EQT STIP for the 2018 plan year.
|
||||||||
(3)
|
The amounts for 2018 in this column reflect the aggregate grant date fair values determined in accordance with FASB ASC Topic 718 using the assumptions described in Note 9 to Equitrans Midstream’s Consolidated Financial Statements, which is included in Equitrans Midstream’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 14, 2019 and in Note 13 to EQT’s Consolidated Financial Statements, which is included in EQT’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 14, 2019. With respect to stock awards granted in 2018, the table below sets forth the value attributable to performance restricted stock units valued at target achievement. Pursuant to SEC rules, the amounts included for awards subject to performance conditions are based on the probable outcome as of the date of grant, which would have amounted to the target total grant date fair values listed in the table below. These performance restricted stock units may pay out up to 300% of the target award, which would have amounted to the maximum total grant date fair values listed in the table below.
|
Name
|
Target Total Grant Date Fair Value
($)
|
Maximum Total Grant Date Fair Value
($)
|
||
D.M. Charletta
|
394,006
|
|
1,182,018
|
|
P.D. Swisher
|
104,704
|
|
314,112
|
|
S.T. Schlotterbeck
|
4,975,215
|
|
14,925,645
|
|
R.J. McNally
|
1,841,312
|
|
5,523,936
|
|
J.J. Ashcroft III
|
1,920,138
|
|
5,760,414
|
|
J.S. Smith
|
310,712
|
|
932,136
|
|
(4)
|
This column reflects the grant date fair values of EQT stock option awards granted on January 1, 2018 calculated using a Black-Scholes option pricing model using the assumptions described in Note 9 to EQT’s Consolidated Financial Statements, which is included in EQT’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 14, 2019.
|
||||||||
(5)
|
The amounts for 2018 in this column reflect the cash portion of the EQT 2018 Strategic Implementation Awards. See “Long-Term Incentives” in the Compensation Discussion and Analysis above for further discussion of the strategic implementation awards for 2018.
|
||||||||
(6)
|
This column includes the dollar value of premiums paid by EQT and Equitrans Midstream for group life, Equitrans Midstream’s contributions to the 401(k) plan and the Payroll Deduction and Contribution Program, and perquisites. For 2018, these amounts were as follows:
|
Name
|
insurance Premiums
($)
|
401(k) Contributions
($)
|
Payroll Deduction and Contribution Program
($)
|
Perquisites
(see below)
($)
|
Total
($)
|
|||||
Thomas F. Karam
|
—
|
|
15,508
|
|
29,370
|
|
—
|
|
44,878
|
|
Kirk R. Oliver
|
—
|
|
9,808
|
|
—
|
|
—
|
|
9,808
|
|
Diana M. Charletta
|
—
|
|
24,750
|
|
—
|
|
—
|
|
24,750
|
|
Phillip D. Swisher
|
—
|
|
18,312
|
|
—
|
|
—
|
|
18,312
|
|
S.T. Schlotterbeck
|
449
|
|
—
|
|
—
|
|
—
|
|
449
|
|
R.J. McNally
|
1,771
|
|
—
|
|
—
|
|
43,021
|
|
44,792
|
|
J.J. Ashcroft III
|
—
|
|
—
|
|
—
|
|
14,397
|
|
14,397
|
|
J.S. Smith
|
913
|
|
—
|
|
—
|
|
—
|
|
913
|
|
|
|
|
|
ESTIMATED FUTURE PAYOUTS UNDER NON-EQUITY INCENTIVE PLAN AWARDS
|
ESTIMATED FUTURE PAYOUTS UNDER EQUITY INCENTIVE PLAN AWARDS
|
ALL OTHER STOCK AWARDS; NUMBER OF SHARES OF STOCK OR UNITS
|
ALL OTHER OPTION AWARDS; NUMBER OF SECURITIES UNDERLYING OPTIONS
|
EXERCISE OR BASE PRICE OF OPTION AWARDS
|
GRANT DATE FAIR VALUE OF STOCK AND OPTION AWARDS
|
||||||||||||||
NAME
|
TYPE OF AWARD
|
GRANT DATE
|
APPROVAL DATE
|
THRESHOLD
|
TARGET
|
MAXIMUM
|
THRESHOLD
|
TARGET
|
MAXIMUM
|
||||||||||||||
|
(1)
|
|
|
($)
|
($) (2)
|
($) (2)
|
(#)
|
(#) (3)
|
(#) (3)
|
(#) (4)
|
(#)
|
($/SH)
|
($)
|
||||||||||
T. F. Karam
|
RS
|
8/9/2018
|
8/9/2018
|
|
—
|
|
—
|
—
|
|
—
|
|
—
|
|
—
|
|
59,340
|
|
—
|
|
—
|
|
3,000,230
|
|
K. R. Oliver
|
RS
|
9/10/2018
|
9/4/2018
|
|
—
|
|
—
|
—
|
|
—
|
|
—
|
|
—
|
|
8,710
|
|
—
|
|
—
|
|
405,538
|
|
D. M. Charletta
|
PSU
|
1/1/2018
|
12/5/2017
|
|
—
|
|
—
|
—
|
|
—
|
|
2,070
|
6,210
|
—
|
|
—
|
|
—
|
|
158,417
|
|||
|
RS
|
1/1/2018
|
12/5/2017
|
|
—
|
|
—
|
—
|
|
—
|
|
—
|
|
—
|
|
2,070
|
|
—
|
|
—
|
|
117,824
|
|
|
VDA
|
1/1/2018
|
12/5/2017
|
|
—
|
|
—
|
—
|
|
—
|
|
4,140
|
12,420
|
—
|
|
—
|
|
—
|
|
235,649
|
|||
P. D. Swisher
|
PSU
|
1/1/2018
|
12/5/2017
|
|
—
|
|
—
|
—
|
|
—
|
|
550
|
1,650
|
—
|
|
—
|
|
—
|
|
42,092
|
|||
|
RS
|
1/1/2018
|
12/5/2017
|
|
—
|
|
—
|
—
|
|
—
|
|
—
|
|
|
|
550
|
|
—
|
|
—
|
|
31,306
|
|
|
VDA
|
1/1/2018
|
12/5/2017
|
|
—
|
|
—
|
—
|
|
—
|
|
1,100
|
3,300
|
—
|
|
—
|
|
—
|
|
62,612
|
|||
|
SIA
|
3/7/2018
|
—
|
|
—
|
|
—
|
—
|
|
—
|
|
—
|
|
|
|
650
|
|
—
|
|
—
|
|
30,882
|
|
S. T. Schlotterbeck
|
ESTIP
|
—
|
—
|
|
—
|
|
1,008,000
|
5,000,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
PSU
|
1/1/2018
|
12/5/2017
|
|
—
|
|
—
|
—
|
|
—
|
|
65,010
|
195,030
|
—
|
|
—
|
|
—
|
|
4,975,215
|
||||
RS
|
1/1/2018
|
12/5/2017
|
|
—
|
|
—
|
—
|
|
—
|
|
—
|
|
—
|
|
32,510
|
|
—
|
|
—
|
|
1,850,469
|
||
SO
|
1/1/2018
|
12/5/2017
|
|
—
|
|
—
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
108,500
|
|
56.92
|
|
1,669,815
|
||
R. J. McNally
|
ESTIP
|
—
|
—
|
|
|
|
477,000
|
5,000,000
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|||
PSU
|
1/1/2018
|
12/5/2017
|
|
—
|
|
—
|
—
|
|
—
|
|
24,060
|
72,180
|
—
|
|
—
|
|
—
|
|
1,841,312
|
||||
RS
|
1/1/2018
|
12/5/2017
|
|
—
|
|
—
|
—
|
|
—
|
|
—
|
|
—
|
|
12,030
|
|
—
|
|
—
|
|
684,748
|
||
SO
|
1/1/2018
|
12/5/2017
|
|
—
|
|
—
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
40,200
|
|
56.92
|
|
618,678
|
||
SIA
|
3/15/2018
|
—
|
|
—
|
|
—
|
—
|
|
—
|
|
—
|
|
—
|
|
10,060
|
|
—
|
|
—
|
|
477,951
|
||
J. J. Ashcroft, III
|
ESTIP
|
—
|
—
|
|
|
|
513,500
|
5,000,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
PSU
|
1/1/2018
|
12/5/2017
|
|
—
|
|
—
|
—
|
|
—
|
|
25,090
|
75,270
|
—
|
|
—
|
|
—
|
|
1,920,138
|
||||
RS
|
1/1/2018
|
12/5/2017
|
|
—
|
|
—
|
—
|
|
—
|
|
—
|
|
—
|
|
12,550
|
|
—
|
|
—
|
|
714,346
|
||
SO
|
1/1/2018
|
12/5/2017
|
|
—
|
|
—
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
41,900
|
|
56.92
|
|
644,841
|
||
SIA
|
3/15/2018
|
—
|
|
—
|
|
—
|
—
|
|
—
|
|
—
|
|
—
|
|
2,020
|
|
—
|
|
—
|
|
95,970
|
||
J. S. Smith
|
ESTIP
|
—
|
—
|
|
—
|
|
112,000
|
5,000,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
PSU
|
1/1/2018
|
12/5/2017
|
|
—
|
|
—
|
—
|
|
—
|
|
4,060
|
12,180
|
—
|
|
—
|
|
—
|
|
310,712
|
||||
RS
|
1/1/2018
|
12/5/2017
|
|
—
|
|
—
|
—
|
|
—
|
|
—
|
|
—
|
|
2,030
|
|
—
|
|
—
|
|
115,548
|
||
SO
|
1/1/2018
|
12/5/2017
|
|
—
|
|
—
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
6,800
|
|
56.92
|
|
104,652
|
||
SIA
|
3/15/2018
|
—
|
|
—
|
|
—
|
—
|
|
—
|
|
—
|
|
—
|
|
1,350
|
|
—
|
|
—
|
|
64,139
|
(1)
|
Type of Award:
|
|||
|
ESTIP=EQT 2018 Executive Short Term Incentive Plan Award
SO=EQT 2018 Stock Options
PSU = EQT 2018 IPSUP Awards
RS=EQT 2018 Restricted Share and Unit Awards
VDA=EQT 2018 Value Driver Performance Share Unit Awards
SIA=EQT 2018 Strategic Implementation Awards
|
|||
|
|
|||
(2)
|
These columns reflect the annual incentive award target and maximum amounts granted under the EQT 2018 Executive STIP to current EQT employees. Under the EQT 2018 Executive STIP, a formula based on EQM adjusted 2018 EBITDA compared to EQT’s business plan establishes the maximum payment for EQT employees from which the EQT MDC Committee may exercise its discretion downward in determining the actual payment. The payout amounts could range from no payment, to the percentage of base salary identified as the target annual incentive award (target), to $5 million (maximum).
|
|||
(3)
|
These columns reflect the target and maximum number of units payable under the EQT 2018 Incentive PSU Program and the EQT 2018 Value Driver Performance Share Unit Awards, as applicable. They also reflect the number of units payable under the EQT 2018 Strategic Implementation Awards. For all named executive officers other than Mr. Swisher, the Strategic Implementation Award would have been forfeited if the Separation had not occurred by March 15, 2020. For details of each of these programs and awards, see the relevant section under “Long-Term Incentives” in the Compensation Discussion and Analysis above. The vesting schedules of the grants mentioned in these columns are as follows for each named executive officer (subject to continued employment with EQT or Equitrans Midstream, as applicable, through each applicable vesting date):
|
Type of Award
|
Vesting Schedule
(subject to continued employment with Equitrans Midstream)
|
EQT 2018 IPSUP Awards
|
100% vesting on the payment date following December 31, 2020
|
EQT 2018 Value Drive Performance Share Unit Awards
|
50% vesting on the payment date following December 31, 2018
50% vesting on the payment date following December 31, 2019
|
EQT 2018 Strategic Implementation Awards
|
50% vesting on March 15, 2019 (March 7, 2019 for Mr. Swisher)
50% vesting on March 15, 2020 (March 7, 2019 for Mr. Swisher)
|
(4)
|
This column reflects the number of time-based restricted stock and/or share units granted to the named executive officers. For details regarding the terms of these awards, see “Restricted Shares” and "Restricted Share Units” under “Long-Term Incentives” in the Compensation Discussion and Analysis above. Each grant mentioned in this column is subject to a three year vesting schedule, subject to continued employment with EQT or Equitrans Midstream, as applicable, through the vesting date.
|
•
|
restrictions on competition for 24 months (12 months for Mr. Swisher);
|
•
|
restrictions on customer solicitation for 24 months (12 months for Mr. Swisher); and
|
•
|
restrictions on employee, consultant, vendor or independent contractor recruitment for 36 months (12 months for Mr. Swisher).
|
|
EQUITY AWARDS
|
|
||||||||||
|
NUMBER OF
SHARES OR
UNITS OF
STOCK
THAT HAVE
NOT
VESTED
|
MARKET
VALUE OF
SHARES OR
UNITS OF
STOCK THAT
HAVE NOT
VESTED
|
EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED
|
EQUITY INCENTIVE
PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITS
OR OTHER RIGHTS THAT HAVE NOT VESTED
|
||||||||
|
(#) (1)
|
($) (2)
|
(#) (3)
|
($) (4)
|
||||||||
T. F. Karam
|
59,474
|
|
*
|
|
1,123,456
|
|
—
|
|
|
—
|
|
|
47,501
|
|
|
|
950,970
|
|
—
|
|
|
—
|
|
||
K. R. Oliver
|
—
|
|
|
|
—
|
|
8,724
|
|
*
|
164,793
|
|
|
—
|
|
|
|
—
|
|
6,968
|
|
|
139,499
|
|
||
D. M. Charletta
|
—
|
|
|
|
—
|
|
2,790
|
|
(d)*
|
52,703
|
|
|
—
|
|
|
|
—
|
|
1,790
|
|
(e)*
|
33,806
|
|
||
1,790
|
|
(a)*
|
|
33,805
|
|
—
|
|
|
—
|
|
||
—
|
|
|
|
—
|
|
2,077
|
|
(f)*
|
39,234
|
|
||
2,077
|
|
(b)*
|
|
39,234
|
|
—
|
|
|
—
|
|
||
—
|
|
|
|
—
|
|
3,571
|
|
(g)*
|
67,461
|
|
||
—
|
|
|
|
—
|
|
4,154
|
|
(h)*
|
78,469
|
|
||
—
|
|
|
|
—
|
|
2,229
|
|
(d)
|
44,625
|
|
||
—
|
|
|
|
—
|
|
1,430
|
|
(e)
|
28,629
|
|
||
1,430
|
|
(a)
|
|
28,529
|
|
—
|
|
|
—
|
|
||
—
|
|
|
|
—
|
|
1,659
|
|
(f)
|
33,213
|
|
||
1,659
|
|
(b)
|
|
33,213
|
|
—
|
|
|
—
|
|
||
—
|
|
|
|
—
|
|
2,853
|
|
(g)
|
57,117
|
|
||
|
|
—
|
|
|
|
—
|
|
3,318
|
|
(h)
|
66,426
|
|
Compensation Feature
|
2018
|
Annual cash retainer - Board member
|
$65,000
|
Annual cash retainer - Committee Chair
|
Audit: $20,000
Conflicts:$10,000
|
Annual cash retainer - Committee member (excluding the chair)
|
Audit: $5,000
Conflicts: None
|
Meeting fees
|
Conflicts Committee:
In person: $1,500
Telephonic: $750
All other meetings: None
|
NAME
|
|
FEES EARNED OR PAID IN CASH
($) (1)
|
|
STOCK
AWARDS ($) (2) |
|
ALL OTHER
COMPENSATION ($) (3) |
|
TOTAL
($) |
|||||||||
J.M. Bott (4)
|
|
12,444
|
|
|
85,527
|
|
|
5,044
|
|
|
103,015
|
|
|||||
M.A. Bryson
|
|
97,000
|
|
|
85,527
|
|
|
30,044
|
|
|
212,571
|
|
|||||
K.M. Burke (4)
|
|
18,628
|
|
|
22,092
|
|
|
15
|
|
|
40,735
|
|
|||||
S.A. Thorington (4)
|
|
49,790
|
|
|
71,487
|
|
|
50,015
|
|
|
171,292
|
|
|||||
L.E. Washington
|
|
90,444
|
|
|
85,527
|
|
|
11,044
|
|
|
187,015
|
|
(1)
|
Includes annual cash retainer, meeting fees and committee chair fees related to services rendered during 2018. The fourth quarter retainer and meeting fees were paid in 2019.
|
(2)
|
This column reflects the aggregate grant date fair values determined in accordance with FASB ASC Topic 718 for the phantom units awarded to each director during 2018. On January 1, 2018, the EQM General Partner granted 1,170 phantom units to each non-employee director. Mr. Thorington, who was elected to the Board on February 26, 2018, received an award of 1,170 phantom units on February 27, 2018. Mr. Burke, who was elected to the Board on September 25, 2018, received an award of 420 phantom units on September 26, 2018. The grant date fair value is computed as the sum of the number of phantom units awarded on the grant date multiplied by, in the case of Messrs. Bryson and Bott and Ms. Washington, the closing price of EQM’s common units on the business day prior to the grant date, which closing price was $73.10 on December 29, 2017, in the case of Mr. Thorington, the closing price of EQM’s common units on the business day prior to the grant date, which closing price was $61.10 on February 26, 2018, and in the case of Mr. Burke, the closing price of EQM’s common units on the business day prior to the grant date, which closing price was $52.60 on September 25, 2018.
|
(3)
|
This column reflects (i) annual premiums of $43.88 per director paid for life insurance and travel accident insurance policies (Mr. Bott - $43.88; Mr. Bryson - $43.88; Mr. Burke - $14.63; Mr. Thorington - $14.63; and Ms. Washington - $43.88) and (ii) the following matching gifts made to qualifying organizations under the EQT Foundation’s Matching Gifts Program: Mr. Bryson - $30,000; Mr. Bott - $5,000; Mr. Thorington - $50,000; and Ms. Washington - $11,000. Prior to the Separation, the non-employee directors could use a de minimis number of tickets purchased by EQT to attend sporting or other events when such tickets were not otherwise being used for business purposes. The use of such tickets did not result in any incremental costs to EQM.
|
(4)
|
Mr. Bott resigned as a director on February 25, 2018; Mr. Thorington was appointed a director on February 26, 2018 and stepped down from the Board in November 2018 as of the completion of the Separation; Mr. Burke was appointed as a director on September 25, 2018.
|
•
|
each of the directors of the EQM General Partner;
|
•
|
each of the named executive officers of the EQM General Partner; and
|
•
|
all directors and executive officers of the EQM General Partner as a group.
|
NAME OF BENEFICIAL OWNER (1)
|
|
EQM COMMON UNITS BENEFICIALLY OWNED (2) (3)
|
|
PERCENTAGE OF EQM COMMON UNITS BENEFICIALLY OWNED
|
M.A. Bryson
(4)
|
|
16,362
|
|
*
|
K.M. Burke
|
|
2,400
|
|
*
|
D.M. Charletta
(5)
|
|
3,246
|
|
*
|
R.J. Cooper
|
|
878
|
|
*
|
T.F. Karam
|
|
—
|
|
—
|
K.R. Oliver
|
|
—
|
|
—
|
P.D. Swisher
|
|
1,790
|
|
*
|
L.E. Washington
|
|
8,800
|
|
*
|
S.T. Schlotterbeck
(6)
|
|
7,897
|
|
*
|
R.J. McNally
|
|
—
|
|
—
|
J.J. Ashcroft III
(7)
|
|
—
|
|
—
|
J.S. Smith
|
|
2,146
|
|
*
|
All directors and executive officers as a group (12 individuals)
|
|
43,519
|
|
*
|
(1)
|
Unless otherwise indicated, the address for all beneficial owners in this table is c/o EQM Midstream Services, LLC, 625 Liberty Avenue, Suite 2000, Pittsburgh, PA 15222, Attn: Corporate Secretary.
|
(2)
|
This column reflects the number of common units held of record or owned through a bank, broker or other nominee.
|
(3)
|
For Messrs. Bryson and Burke and Ms. Washington, this column includes phantom units, including accrued distributions, to be settled in EQM common units, in the following amounts: Mr. Bryson - 12,187 units; Mr. Burke - 2,400 units; and Ms. Washington - 8,180 units.
|
(4)
|
EQM common units beneficially owned include 3,000 common units that are held in Mrs. Bryson’s revocable trust.
|
(5)
|
EQM common units beneficially owned include 1,000 common units held by Ms. Charletta’s spouse, over which Ms. Charletta has shared voting and investment authority.
|
(6)
|
Information regarding EQM shares beneficially owned by Mr. Schlotterbeck was provided by Mr. Schlotterbeck as of January 2, 2018.
|
(7)
|
Information regarding EQM shares beneficially owned by Mr. Ashcroft is based on information provided by Mr. Ashcroft as of December 19, 2018.
|
NAME
|
COMMON STOCK(1)
|
EXERCISABLE
STOCK OPTIONS (2)
|
NUMBER OF ETRN SHARES
BENEFICIALLY OWNED
|
PERCENT OF
CLASS (3)
|
M.A. Bryson
|
—
|
—
|
—
|
—
|
K.M. Burke
|
31,578
|
—
|
31,578
|
*
|
D.M. Charletta
(4)
|
11,616
|
—
|
11,616
|
*
|
R.J. Cooper
|
4,408
|
—
|
4,408
|
*
|
T.F. Karam
|
66,554
|
—
|
66,554
|
*
|
K.R. Oliver
|
—
|
—
|
—
|
—
|
P.D. Swisher
|
3,163
|
—
|
3,163
|
*
|
L.E. Washington
|
—
|
—
|
—
|
—
|
S.T. Schlotterbeck
(5)
|
136,518
|
—
|
136,518
|
*
|
R.J. McNally
|
40,438
|
31,588
|
72,026
|
*
|
J.J. Ashcroft III
(6)
|
—
|
—
|
—
|
—
|
J.S. Smith
|
10,607
|
—
|
10,607
|
*
|
All directors and executive officers as a group (12 individuals)
|
304,882
|
31,588
|
336,470
|
*
|
(1)
|
This column reflects shares held of record and shares owned through a bank, broker or other nominee, including shares owned through a 401(k) plan. For Messrs. Burke and Karam, this column includes deferred stock units, including accrued dividends, to be settled in ETRN common stock, and over which the directors have no voting or investment power prior to settlement, in the following amounts: Mr. Burke - 27,578 units; Mr. Karam -3,053 units.
|
(2)
|
This column reflects the number of shares of ETRN common stock that the executive officers and directors had a right to acquire within 60 days after January 31, 2019 through the exercise of stock options.
|
(3)
|
This column reflects the number of ETRN shares beneficially owned as a percentage of the sum of ETRN’s outstanding shares at January 31, 2019, and all options exercisable within 60 days of January 31, 2019,
|
(4)
|
Shares beneficially owned include 3,525 shares owned by Ms. Charletta’s husband, of which 59 shares are held in Ms. Charletta’s husband’s 401(k) plan.
|
(5)
|
Shares beneficially owned include 22,409 shares owned by Mr. Schlotterbeck’s wife. Information on ETRN share ownership has been calculated based on Mr. Schlotterbeck's EQT common stock holdings reported on his most recent EQT Form 4 filed with the Securities and Exchange Commission on February 26, 2018.
|
(6)
|
Information on ETRN shares beneficially owned by Mr. Ashcroft is based on information provided by Mr. Ashcroft as of December 19, 2018.
|
NAME OF BENEFICIAL
OWNER
|
|
EQM COMMON UNITS BENEFICIALLY OWNED
|
|
PERCENTAGE OF EQM UNITS BENEFICIALLY OWNED
|
||||
Equitrans Midstream Corporation
(1)
|
|
37,245,455
|
|
|
|
30.6
|
|
%
|
625 Liberty Avenue
|
|
|
|
|
|
|
||
Pittsburgh, PA 15222
|
|
|
|
|
|
|
||
Tortoise Capital Advisors, L.L.C.
(2)
|
|
13,128,039
|
|
|
|
10.9
|
|
%
|
11550 Ash Street, Suite 300
|
|
|
|
|
|
|
||
Leawood, KS 66211
|
|
|
|
|
|
|
||
ALPS Advisors, Inc.
(3)
|
|
8,242,295
|
|
|
|
6.8
|
|
%
|
1290 Broadway, Suite 1100
|
|
|
|
|
||||
Denver, CO 80203
|
|
|
|
|
||||
Goldman Sachs Asset Management, L.P.
(4)
|
|
6,434,292
|
|
|
|
5.3
|
|
%
|
200 West Street
|
|
|
|
|
|
|
||
New York, NY 10282
|
|
|
|
|
|
|
(1)
|
Equitrans Midstream does not directly own any common units; however, as the indirect owner of 100% of the partnership interests in EQGP Holdings, LP and the sole member of EMH, Equitrans Midstream may be deemed to beneficially own the 21,811,643 EQM common units beneficially owned by EQGP and the 15,433,812 EQM common units beneficially owned by EMH, which in the aggregate represent approximately 30.6% of the outstanding units.
|
(2)
|
Information provided by Tortise Capital Advisors, L.L.C. on January 7, 2019 reporting that as of December 31, 2018 Tortoise Capital Advisors, L.L.C. has sole voting power and dispositive power over 806,045 EQM common units, shared voting power over 11,796,033 EQM common units and shared dispositive power over 13,128,039 EQM common units.
|
(3)
|
Information based on a SEC Schedule 13G filed on February 4, 2019 reporting that ALPS Advisors, Inc. has shared voting and dispositive power over 8,242,295 EQM common units, of which 8,234,295 EQM common units are attributable to Alerian MLP ETF, an investment company to which ALPS Advisors, Inc. furnishes investment advice. Alerian MLP ETF has shared voting and dispositive power with respect to the 8,234,295 EQM common units.
|
(4)
|
Information based on a SEC Schedule 13G filed on February 11, 2019 reporting that Goldman Sachs Asset Management, L.P. has shared voting and dispositive power over 6,434,292 EQM common units with GS Investment Strategies, LLC.
|
PLAN CATEGORY
|
|
NUMBER OF
SECURITIES TO
BE
ISSUED UPON
EXERCISE OF
OUTSTANDING
OPTIONS,
WARRANTS
AND RIGHTS
|
|
WEIGHTED
AVERAGE
EXERCISE PRICE OF
OUTSTANDING
OPTIONS,
WARRANTS AND
RIGHTS
|
|
NUMBER OF
SECURITIES
REMAINING
AVAILABLE FOR
FUTURE ISSUANCE
UNDER
EQUITY
COMPENSATION
PLANS (EXCLUDING
SECURITIES
REFLECTED IN
COLUMN A)
|
||||||
|
|
(A)
|
|
(B)
|
|
(C)
|
||||||
Equity Compensation Plans Approved by Unitholders
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Equity Compensation Plans Not Approved by Unitholders
(1)
|
|
242,296
|
|
|
|
N/A
|
|
|
|
1,515,408
|
|
(2)
|
Total
|
|
242,296
|
|
|
|
N/A
|
|
|
|
1,515,408
|
|
|
(1)
|
The Board adopted the EQT Midstream Services, LLC 2012 Long-Term Incentive Plan in connection with EQM's IPO of common units.
|
(2)
|
The EQT Midstream Services, LLC 2012 Long-Term Incentive Plan authorizes the granting of awards in any of the following forms: phantom units, performance awards, restricted units, distribution equivalent rights, market-priced options to purchase units, unit appreciation rights, other unit-based awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on units, and cash-based awards.
|
•
|
EQM’s obligation to reimburse Equitrans Midstream and its affiliates for certain direct operating expenses and all insurance coverage expenses they incur or pay with respect to EQM’s assets; and
|
•
|
EQM’s obligation to reimburse Equitrans Midstream and its affiliates for providing general and administrative services to EQM, including EQM’s public company expenses and general and administrative expenses.
|
•
|
replaced the secondment agreement described under “Agreements with EQT-Secondment Agreement” below, which previously allowed EQM to utilize the secondment of available EQT employees under the control of EQM to operate its assets;
|
•
|
provides for the secondment to EQM of available Equitrans Midstream employees to operate EQM’s assets under the control of EQM; and
|
•
|
provides that EQM will reimburse Equitrans Midstream and its affiliates for the services provided by the seconded employees.
|
•
|
Plugging and abandonment liabilities.
For a period of ten years after the closing of the IPO, which occurred on July 2, 2012, EQT is required to reimburse EQM for plugging and abandonment expenditures and other expenditures for certain identified wells of EQT and third parties. The reimbursement obligation of EQT with respect to wells owned by third parties is capped at $1.2 million per year.
|
•
|
Bare steel replacement.
EQT is required to reimburse EQM for bare steel replacement capital expenditures in the event that ongoing maintenance capital expenditures (other than capital expenditures associated with plugging and abandonment liabilities to be reimbursed by EQT) exceed $17.2 million (with respect to EQM’s assets at the time of the IPO) in any year. If such ongoing maintenance capital expenditures and bare steel replacement capital expenditures exceed $17.2 million during a year, EQT is required to reimburse EQM for the lesser of (i) the amount of bare steel replacement capital expenditures during such year and (ii) the amount by which such ongoing capital expenditures and bare steel replacement capital expenditures exceeds $17.2 million. This bare steel replacement reimbursement obligation is capped at an aggregate amount of $31.5 million over the ten years following the IPO.
|
•
|
Pipeline Safety Cost Tracker Reimbursement.
For a period of five years after the closing of the IPO, EQT was required to reimburse EQM for the amount by which the qualifying pipeline safety costs included in the annual pipeline safety cost tracker filings made by Equitrans, L.P. (Equitrans) with the FERC exceeded the qualifying pipeline safety costs actually recovered each year. This reimbursement obligation expired on July 2, 2017.
|
•
|
Taxes.
Until 60 days after the expiration of any applicable statute of limitations, EQT will indemnify EQM for any income taxes attributable to operations or ownership of the assets prior to the closing of the IPO, including any such income tax liability of EQT and its affiliates that may result from EQM’s formation transactions.
|
•
|
Retained liabilities.
EQT is required to indemnify EQM for any liabilities, claims or losses relating to or arising from assets owned or previously owned by EQM and retained by EQT and its affiliates following the closing of the IPO.
|
•
|
Big Sandy Pipeline.
EQT is required to indemnify EQM for any claims related to Equitrans' previous ownership of the Big Sandy Pipeline, which was sold to a third party, including claims arising under the Big Sandy Purchase Agreement.
|
•
|
Contractual Offsets.
EQT is required to indemnify EQM for any amounts owed to EQM by a third party that has exercised a contractual right of offset against amounts owed by EQT to such third party.
|
•
|
EQT’s obligation to indemnify or reimburse EQM for losses or expenses relating to or arising from (i) certain plugging and abandonment obligations, (ii) certain bare steel replacement capital expenditures, (iii) certain preclosing tax liabilities, (iv) any claims related to Equitrans’s previous ownership of the Big Sandy Pipeline, and (v) any amounts owed to EQM by a third party that has exercised a contractual right of offset against amounts owed by EQT to such third party, in each case, as described above; and
|
•
|
EQM’s obligation to indemnify EQT for losses attributable to (i) the ownership or operation of EQM’s assets, and (ii) any amounts owed to EQT by a third party that has exercised a contractual right of offset against amounts owed by EQM to such third party.
|
•
|
EQT RE’s obligation to indemnify the RMP Group for losses or expenses relating to or raising from (i) any event or condition related to the assets owned by EQT and certain of the entities it controls (the EQT Entities) not conveyed to the RMP Group, and (ii) certain preclosing tax liabilities; and
|
•
|
the RMP Group’s obligation to indemnify the EQT Entities for losses attributable to the ownership or operation of the RMP Group’s assets.
|
•
|
Third Amended and Restated Water Services Agreement, dated December 3, 2018 (Kevech/Smith Agreement). Pursuant to the Kevech/Smith Agreement, Equitrans Midstream will provide fresh water from its Washington and Greene County system to EQT’s SR-917, Xman, Cashdollar, Kevech, Smith and Mojo well pads and charge a fixed rate paid that varies by delivery point. Equitrans Midstream’s service will be provided on an interruptible basis, although EQT has committed to exclusively using Equitrans Midstream’s water provided from the Smith and Kevech delivery points. EQT must provide 60 days’ notice prior to required service at the Cashdollar, Smith, and Kevech delivery points and 45 days’ notice prior to required service for all other delivery points. The Kevech/Smith Agreement has an initial term expiring October 21, 2022, which may be extended annually by EQT with prior notice for up to four periods of one year each.
|
•
|
Water Services Agreement, dated December 3, 2018 (Steelhead Agreement). Pursuant to the Steelhead Agreement, Equitrans Midstream will provide fresh water from the SPWA system to EQT’s Hunter, Gahagan, Gregor, Lacko and Sanders well pads (and any additional delivery points added within 2,500 feet of each pad) and charge a tiered rate paid based upon water volumes provided. Equitrans Midstream’s service is provided on a firm basis up to EQT’s agreed minimum annual water volume commitment and on an interruptible basis thereafter. The Steelhead Agreement contemplates an in-service date within November 15 and December 1, 2018 and has an initial term of ten years which can be extended year to year thereafter.
|
•
|
Water Service Agreement, dated December 10, 2018 (SGL-179 Agreement). Pursuant to the SGL-179 Agreement, Equitrans Midstream will provide fresh water from the SPWA system to EQT’s State Game Lands 179 well pad (and any additional delivery points that are added within a 1.5 mile radius around the SGL-179 pad) and charge a tiered rate paid based upon water volumes provided. Equitrans Midstream’s service is to be provided on a firm basis up to EQT’s agreed minimum annual water volume commitment and on an interruptible basis thereafter. The SGL-179 Agreement contemplates an in-service date range within June 1 and June 15, 2019 and has an initial term of ten years which can be extended year to year thereafter.
|
|
Years Ended December 31,
|
||||||||
|
2018
|
2017
|
2016
|
||||||
|
(Thousands)
|
||||||||
DESCRIPTION OF REVENUE
|
|
|
|
||||||
Gathering
|
$
|
997,070
|
|
$
|
509,967
|
|
$
|
397,494
|
|
Transmission
|
$
|
386,801
|
|
$
|
371,986
|
|
$
|
334,778
|
|
Water Service
|
$
|
111,227
|
|
$
|
13,605
|
|
$
|
—
|
|
•
|
approved by the Conflicts Committee, although the EQM General Partner is under no obligation to seek such approval;
|
•
|
approved by the vote of a majority of the outstanding common units, excluding any common units owned by the EQM General Partner or any of its affiliates;
|
•
|
determined by the Board to be on terms no less favorable to EQM than those generally being provided to or available from unrelated third parties; or
|
•
|
determined by the Board to be fair and reasonable to EQM, taking into account the totality of the relationships among the parties involved, including other transactions that may be particularly favorable or advantageous to EQM.
|
|
Years Ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
Audit fees
(1)
|
$
|
817,920
|
|
|
$
|
705,000
|
|
Audit-related fees
(2)
|
—
|
|
|
4,500
|
|
||
Tax fees
|
—
|
|
|
—
|
|
||
All other fees
|
—
|
|
|
—
|
|
||
Total
|
$
|
817,920
|
|
|
$
|
709,500
|
|
(1)
|
Includes fees for the audit of EQM’s annual financial statements and internal control over financial reporting, reviews of financial statements included in EQM’s quarterly reports on Form 10-Q, and services that are normally provided in connection with statutory and regulatory filings or engagements, including certain attest engagements, comfort letter procedures and consents.
|
(2)
|
Includes fees for services associated with attest engagements not required by statute or regulation.
|
•
|
Bookkeeping or other services related to the accounting records or financial statements
|
•
|
Financial information systems design and implementation
|
•
|
Appraisal or valuation services, fairness opinions or contribution-in-kind reports
|
•
|
Actuarial services
|
•
|
Internal audit outsourcing services
|
•
|
Management functions
|
•
|
Human resources functions
|
•
|
Broker-dealer, investment adviser or investment banking services
|
•
|
Legal services
|
•
|
Expert services unrelated to the audit
|
•
|
Prohibited tax services
|
(a)
|
1
|
|
Financial Statements
|
Page
Reference
|
|
|
Statements of Consolidated Operations for each of the three years in the period ended December 31, 2018
|
||
|
|
Statements of Consolidated Cash Flows for each of the three years in the period ended December 31, 2018
|
||
|
|
Consolidated Balance Sheets as of December 31, 2018 and 2017
|
||
|
|
Statements of Consolidated Equity for each of the three years in the period ended December 31, 2018
|
||
|
|
Notes to Consolidated Financial Statements
|
||
|
|
|
|
|
|
2
|
|
Financial Statement Schedules
|
|
|
|
All schedules are omitted since the subject matter thereof is either not present or is not present in amounts sufficient to require submission of the schedules.
|
|
|
|
|
|
|
|
|
3
|
|
Exhibits
|
|
|
|
The exhibits referenced below are filed (or, as applicable, furnished) as part of this Annual Report on Form 10-K.
|
|
Exhibits
|
Description
|
Method of Filing
|
Contribution and Sale Agreement, dated as of March 10, 2015, by and among EQM Midstream Partners, LP (formerly known as EQT Midstream Partners, LP), EQT Midstream Services, LLC, EQM Gathering Opco, LLC, EQT Corporation, EQT Gathering, LLC, EQT Energy Supply Holdings, LP, and EQT Energy, LLC. EQM Midstream Partners, LP will furnish supplementally a copy of any omitted schedule and similar attachment to the SEC upon request.
|
Incorporated herein by reference to Exhibit 2.1 to Form 8-K (#001-35574) filed on March 10, 2015.
|
|
Amendment No. 1 to Contribution and Sale Agreement, dated as of March 30, 2017, by and among EQM Midstream Partners, LP (formerly known as EQT Midstream Partners, LP), EQT Midstream Services, LLC, EQM Gathering Opco, LLC, EQT Corporation, EQT Gathering, LLC, EQT Energy Supply Holdings, LP, and EQT Energy, LLC.
|
Incorporated herein by reference to Exhibit 2.1 to Form 10-Q (#001-35574) for the quarterly period ended March 31, 2017.
|
|
Purchase and Sale Agreement, dated as of October 13, 2016, by and among EQT Corporation, EQT Gathering Holdings, LLC, EQT Gathering, LLC, EQM Midstream Partners, LP (formerly known as EQT Midstream Partners, LP), Equitrans Investments, LLC, Equitrans, L.P. and EQM Gathering Opco, LLC. EQM Midstream Partners, LP will furnish supplementally a copy of any omitted schedule and similar attachment to the SEC upon request.
|
Incorporated herein by reference to Exhibit 2.1 to Form 8-K (#001-35574) filed on October 13, 2016.
|
|
Agreement and Plan of Merger, dated as of April 25, 2018, by and among EQM Midstream Partners, LP (formerly known as EQT Midstream Partners, LP), EQM Midstream Services, LLC (formerly known as EQT Midstream Services, LLC), EQM Acquisition Sub, LLC, EQM GP Acquisition Sub, LLC, RM Partners LP (formerly known as Rice Midstream Partners LP), EQM Midstream Management LLC (formerly known as Rice Midstream Management LLC) and, solely for purposes of certain provisions thereof, EQT Corporation. EQM Midstream Partners, LP will furnish supplementally a copy of any omitted schedule and similar attachment to the SEC upon request.
|
Incorporated herein by reference to Exhibit 2.1 to Form 8-K (#001-35574) filed on April 26, 2018.
|
Omnibus Agreement, dated November 13, 2018, among Equitrans Midstream Corporation, EQM Midstream Partners, LP, and EQM Midstream Services, LLC.
|
Incorporated herein by reference to Exhibit 10.3 to Form 8-K (#001-35574) filed on November 13, 2018.
|
|
Secondment Agreement, dated November 13, 2018, by and among Equitrans Midstream Corporation, EQM Midstream Partners, LP, and EQM Midstream Services, LLC.
|
Incorporated herein by reference to Exhibit 10.4 to Form 8-K (#001-35574) filed on November 13, 2018.
|
|
List of Subsidiaries of EQM Midstream Partners, LP.
|
Filed herewith as Exhibit 21.1.
|
|
Consent of Independent Registered Public Accounting Firm.
|
Filed herewith as Exhibit 23.1.
|
|
Rule 13(a)-14(a) Certification of Principal Executive Officer.
|
Filed herewith as Exhibit 31.1.
|
|
Rule 13(a)-14(a) Certification of Principal Financial Officer.
|
Filed herewith as Exhibit 31.2.
|
|
Section 1350 Certification of Principal Executive Officer and Principal Financial Officer.
|
Furnished herewith as Exhibit 32.
|
|
99.1
|
Named Executive Officer Compensation 2017 Peer Companies (General Industry).
|
Incorporated herein by reference to Exhibit 99.2 to Form 10-K (#001-35574) for the year ended December 31, 2016.
|
99.2
|
Named Executive Officer Compensation 2018 Peer Companies (General Industry).
|
Filed herewith as Exhibit 99.2.
|
99.3
|
Non-GAAP Financial Information.
|
Filed herewith as Exhibit 99.3.
|
99.1
|
Named Executive Officer Compensation 2017 Peer Companies (General Industry).
|
Incorporated herein by reference to Exhibit 99.2 to Form 10-K (#001-35574) for the year ended December 31, 2016.
|
99.2
|
Named Executive Officer Compensation 2018 Peer Companies (General Industry).
|
Filed herewith as Exhibit 99.2.
|
99.3
|
Non-GAAP Financial Information.
|
Filed herewith as Exhibit 99.3.
|
101
|
Interactive Data File.
|
Filed herewith as Exhibit 101.
|
|
EQM Midstream Partners, LP
|
|
|
|
|
|
By: EQM Midstream Services, LLC, its General Partner
|
|
|
|
|
|
By:
|
/s/ THOMAS F. KARAM
|
|
|
Thomas F. Karam
|
|
|
President and Chief Executive Officer
|
|
|
February 14, 2019
|
/s/ THOMAS F. KARAM
|
|
President, Chief Executive Officer and Chairman
|
|
February 14, 2019
|
Thomas F. Karam
|
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
/s/ KIRK R. OLIVER
|
|
Senior Vice President, Chief Financial Officer and Director
|
|
February 14, 2019
|
Kirk R. Oliver
|
|
|
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
|
|
/s/ PHILLIP D. SWISHER
|
|
Vice President and Chief Accounting Officer
|
|
February 14, 2019
|
Phillip D. Swisher
|
|
|
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
|
|
/s/ DIANA M. CHARLETTA
|
|
Executive Vice President, Chief Operating Officer and Director
|
|
February 14, 2019
|
Diana M. Charletta
|
|
|
|
|
|
|
|
|
|
/s/ KENNETH M. BURKE
|
|
Director
|
|
February 14, 2019
|
Kenneth M. Burke
|
|
|
|
|
|
|
|
|
|
/s/ MICHAEL A. BRYSON
|
|
Director
|
|
February 14, 2019
|
Michael A. Bryson
|
|
|
|
|
|
|
|
|
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/s/ ROBERT J. COOPER
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Director
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February 14, 2019
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Robert J. Cooper
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/s/ LARA E. WASHINGTON
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Director
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February 14, 2019
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Lara E. Washington
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Entity
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Jurisdiction
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Equitrans Investments, LLC
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Delaware
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Equitrans Services, LLC
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Delaware
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Equitrans, L.P.
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Pennsylvania
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Equitrans Water Services (PA), LLC
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Delaware
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Equitrans Water Services (OH), LLC
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Delaware
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EQM Midstream Finance Corporation
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Delaware
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EQM Midstream Management LLC
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Delaware
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EQM Gathering Holdings, LLC
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Delaware
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EQM Gathering Opco, LLC
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Delaware
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EQM Olympus Midstream LLC
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Delaware
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EQM Poseidon Midstream LLC
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Delaware
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EQM West Virginia Midstream LLC
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Delaware
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EQM VE II Access, LLC
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Delaware
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EQM VG, LLC
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Delaware
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MVP Holdco, LLC
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Delaware
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Rager Mountain Storage Company LLC
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Delaware
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RM Partners LP
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Delaware
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RM Operating LLC
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Delaware
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Strike Force Midstream Holdings LLC
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Delaware
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Strike Force Midstream LLC
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Delaware
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Strike Force East LLC
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Delaware
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Strike Force South LLC
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Delaware
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•
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Registration Statement (Form S-3 No. 333-212362) of EQM Midstream Partners, LP pertaining to the registration of Common Units Representing Limited Partner Interests and Debt Securities,
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•
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Registration Statement (Form S-8 No. 333-182460) pertaining to the EQM Midstream Services, LLC 2012 Long-Term Incentive Plan, and
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•
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Registration Statement (Form S-3 No. 333-205812) of EQM Midstream Partners, LP pertaining to the registration of Common Units Representing Limited Partner Interests;
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Date:
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February 14, 2019
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EQM Midstream Partners, LP
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/s/ THOMAS F. KARAM
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Thomas F. Karam
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President and Chief Executive Officer, EQM Midstream Services, LLC, the registrant’s General Partner
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Date:
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February 14, 2019
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EQM Midstream Partners, LP
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/s/ KIRK R. OLIVER
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Kirk R. Oliver
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Senior Vice President and Chief Financial Officer, EQM Midstream Services, LLC, the registrant’s General Partner
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/s/ THOMAS F. KARAM
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February 14, 2019
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Thomas F. Karam
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President and Chief Executive Officer, EQM Midstream Services, LLC, EQM’s General Partner
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/s/ KIRK R. OLIVER
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February 14, 2019
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Kirk R. Oliver
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Senior Vice President and Chief Financial Officer, EQM Midstream Services, LLC, EQM’s General Partner
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