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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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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
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37-1661577
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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Title of each class
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Trading Symbol
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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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EQM
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New York Stock Exchange
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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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ADIT - Accumulated Deferred Income Taxes
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ARO – asset retirement obligations
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ASU – Accounting Standards Update
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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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HCA - high consequence area
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IDRs – incentive distribution rights
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IPO – initial public offering
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IRS – U.S. 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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guidance regarding EQM's gathering, transmission and storage and water service revenue and volume growth, including the anticipated effects associated with the EQT Global GGA (as defined in Note 19);
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projected revenue (including from firm reservation fees) and expenses, and the effect on projected revenue associated with the EQT Global GGA;
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the weighted average contract life of gathering, transmission and storage contracts;
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infrastructure programs (including the timing, cost, capacity and sources of funding with respect to gathering, transmission and storage and water expansion projects);
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the cost, capacity, timing of regulatory approvals, final design and targeted in-service dates of current projects;
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the ultimate terms, partners and structure of the MVP Joint Venture and ownership interests therein;
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expansion projects in EQM's operating areas and in areas that would provide access to new markets;
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EQM's ability to provide produced water handling services and realize expansion opportunities and related capital avoidance;
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EQM's ability to identify and complete acquisitions and other strategic transactions, including the proposed EQM Merger (as defined in Note 19) and joint ventures, effectively integrate transactions (including Eureka Midstream Holdings, LLC and Hornet Midstream Holdings, LLC) into EQM's operations, and achieve synergies, system optionality and accretion associated with transactions, including through increased scale;
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EQM's ability to access commercial opportunities and new customers for its water services business, and the timing and final terms of any definitive water services agreement between EQT and EQM related to the Water Services Letter Agreement (as defined in Note 19);
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any further credit rating impacts associated with MVP, customer credit ratings changes, including EQT's, and defaults, acquisitions and financings and any further changes in Equitrans Midstream's and EQM’s respective credit ratings;
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distribution amounts, timing and rates, including the effect thereon of completion of the MVP project and expected changes announced in connection with the execution of the EQM Merger Agreement (defined in Note 19);
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the timing of the consummation of the EQM Merger (defined in Note 19);
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the timing and amount of future issuances or repurchases of securities, including in connection with the EQM Merger;
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effects of conversion of EQM securities into Merger Consideration (defined in Note 19) or Equitrans Midstream Preferred Shares (defined in Note 19), as applicable, in connection with the EQM Merger;
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effects of seasonality;
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expected cash flows and MVCs, including those associated with the EQT Global GGA and any definitive agreement between EQT and EQM related to the Water Services Letter Agreement;
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capital commitments;
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projected capital contributions and capital and operating expenditures, including the amount and timing of reimbursable capital expenditures, capital budget and sources of funds for capital expenditures;
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distribution amounts, timing and rates, including the effect thereon of completion of the MVP project;
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the effect and outcome of pending and future litigation and regulatory proceedings;
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changes in commodity prices and the effect of commodity prices on EQM's business;
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liquidity and financing requirements, including sources and availability;
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interest rates;
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EQM’s and its subsidiaries’ respective abilities to service debt under, and comply with the covenants contained in, their respective credit agreements, including obtaining modifications to such covenants;
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expectations regarding production volumes in EQM's areas of operations;
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EQM’s ability to achieve the anticipated benefits associated with the execution of the EQT Global GGA, the EQM Merger Agreement and related agreements; and
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the effects of government regulation; and tax status and position.
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Average daily gathering throughput volumes increased 20.9% from 6,489 BBtu per day for the year ended December 31, 2018 to 7,844 BBtu per day for the year ended December 31, 2019 due largely to the Bolt-on Acquisition described below.
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EQM IDR Transaction. On February 22, 2019, Equitrans Midstream and EQM completed a simplification transaction pursuant to that certain Agreement and Plan of Merger, dated as of February 13, 2019 (the IDR Merger Agreement), by and among Equitrans Midstream, EQM and certain related parties, pursuant to which, among other things, (i) Equitrans Merger Sub, LP, a party to the IDR Merger Agreement, merged with and into EQGP (the Merger) with EQGP continuing as the surviving limited partnership and a wholly-owned subsidiary of EQM following the Merger, and (ii) each of (a) the IDRs in EQM, (b) the economic portion of the general partner interest in EQM and (c) the issued and outstanding EQGP common units representing limited partner interests in EQGP were canceled, and, as consideration for such cancellation, certain affiliates of Equitrans Midstream received on a pro rata basis 80,000,000 newly-issued EQM common units and 7,000,000 newly-issued Class B units (Class B units), both representing limited partner interests in EQM, and EQGP Services, LLC retained the non-economic general partner interest in EQM (the EQM IDR Transaction). Additionally, as part of the EQM IDR Transaction, the 21,811,643 EQM common units held by EQGP were canceled and 21,811,643 EQM common units were issued pro rata to certain affiliates of Equitrans Midstream. See Note 6 for further information on the EQM IDR Transaction and Class B Units. As a result of the EQM IDR Transaction, EQGP Services, LLC (the EQM General Partner) replaced EQM Midstream Services, LLC as our new general partner. See Note 19 related to the treatment of the Class B units in connection with the EQM Merger.
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Bolt-on Acquisition. On March 13, 2019, EQM entered into a Purchase and Sale Agreement (the Purchase and Sale Agreement) with North Haven Infrastructure Partners II Buffalo Holdings, LLC (NHIP), an affiliate of Morgan Stanley Infrastructure Partners, pursuant to which EQM acquired from NHIP a 60% Class A interest in Eureka Midstream Holdings, LLC (Eureka Midstream) and a 100% interest in Hornet Midstream Holdings, LLC (Hornet Midstream) (collectively, the Bolt-on Acquisition). At the time of the acquisition, Eureka Midstream owned a 190-mile gathering header pipeline system in Ohio and West Virginia that services both dry Utica and wet Marcellus Shale production. Hornet Midstream owns a 15-mile, high-pressure gathering system in West Virginia that connects to the Eureka Midstream system. The Bolt-on Acquisition closed on April 10, 2019. See Note 2 for further information on the Bolt-on Acquisition.
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Series A Preferred Unit issuance. On March 13, 2019, EQM entered into a Convertible Preferred Unit Purchase Agreement (inclusive of certain Joinder Agreements entered into on March 18, 2019, the Preferred Unit Purchase Agreement) with certain investors to issue and sell in a private placement (the Private Placement) an aggregate of 24,605,291 Series A Perpetual Convertible Preferred Units (Series A Preferred Units) representing limited partner interests in EQM for a cash purchase price of $48.77 per Series A Preferred Unit, resulting in total gross proceeds of approximately $1.2 billion. The net proceeds from the Private Placement were used in part to fund the purchase price in the Bolt-on Acquisition and to pay certain fees and expenses related to the Bolt-on Acquisition, and the remainder was used for general partnership purposes. The Private Placement closed concurrently with the closing of the Bolt-on Acquisition on April 10, 2019. See Notes 1 and 6 for further information regarding the Series A Preferred Units. See Note 19 related to the treatment of the Series A Preferred Units in connection with the EQM Merger.
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2019 EQM Term Loan Agreement. In August 2019, EQM entered into a term loan agreement that provided for unsecured term loans in an aggregate principal amount of $1.4 billion (the 2019 EQM Term Loan Agreement). The initial term loans provided under the 2019 EQM Term Loan Agreement mature in August 2022. EQM received net proceeds from the issuance of the initial term loans under the 2019 EQM Term Loan Agreement of $1,397.4 million, inclusive of debt issuance costs of $2.6 million. The net proceeds were primarily used to repay borrowings under EQM's $3 billion revolving credit facility (the $3 Billion Facility) and the remainder was used for general partnership purposes. See Note 12 for further information on the 2019 EQM Term Loan Agreement.
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Years Ended December 31,
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2019
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2018
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2017
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Gathering operating revenues
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71
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%
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67
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%
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57
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%
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Transmission operating revenues
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24
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%
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26
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%
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42
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%
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Water operating revenues
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5
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%
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7
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%
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1
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%
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Mountain Valley Pipeline. The MVP Joint Venture is a joint venture among EQM and affiliates of each of NextEra Energy, Inc., Con Edison, AltaGas Ltd. and RGC Resources, Inc. that is tasked with constructing the MVP. As of December 31, 2019, EQM owned a 45.5% interest in the MVP project and will operate the MVP. 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. During the twelve months ended December 31, 2019, EQM made capital contributions of approximately $755 million to the MVP Joint Venture for the MVP project. In 2020, EQM expects to make capital contributions of approximately $650 million to $700 million to the MVP Joint Venture for purposes of the MVP. The MVP Joint Venture has secured a total of 2.0 Bcf per day of firm capacity commitments at 20-year terms and additional shippers 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 and is also evaluating other future pipeline extension projects.
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Wellhead Gathering Expansion and Hammerhead Projects. During the twelve months ended December 31, 2019, EQM invested approximately $785 million in gathering expansion projects. In 2020, EQM expects to invest approximately $500 million in gathering expansion projects (inclusive of expected capital expenditures related to noncontrolling interests in Eureka Midstream), including the continued gathering infrastructure expansion of core development areas in the Marcellus and Utica Shales, in southwestern Pennsylvania, eastern Ohio and northern West Virginia, 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 primarily designed to connect natural gas produced in Pennsylvania and West Virginia to the MVP and is supported by a 20-year term, 1.2 Bcf per day, firm capacity commitment from EQT. The Hammerhead project is expected to cost approximately $555 million. During the twelve months ended December 31, 2019, EQM invested approximately $300 million in the Hammerhead project. The Hammerhead project is expected to become operational in the second quarter of 2020 and will provide interruptible service until the MVP is placed in-service, at which time the firm capacity commitment will begin. The Hammerhead project has a targeted full in-service date of late 2020.
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MVP Southgate Project. In April 2018, the MVP Joint Venture announced the MVP Southgate project, a proposed 75-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 Dominion Energy North Carolina. 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 2020 and 2021. EQM is expected to fund approximately $225 million of the overall project cost. During the twelve months ended December 31, 2019, EQM made capital contributions of approximately $19 million to the MVP Joint Venture for the MVP Southgate project. In 2020, EQM expects to make capital contributions of approximately $50 million to the MVP Joint Venture for the MVP Southgate project. EQM will operate the MVP Southgate pipeline and, as of December 31, 2019, 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. The Final Environmental Impact Statement for the MVP Southgate project was issued on February 14, 2020. The schedule also identifies May 14, 2020 as the deadline for other agencies to act on other federal authorizations required for the project (the FERC, however, is not subject to this deadline). Subject to approval by the FERC and other regulatory agencies, the MVP Southgate project is expected to be placed in-service in 2021.
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Transmission Expansion. During the twelve months ended December 31, 2019, EQM invested approximately $45 million in transmission expansion projects. In 2020, EQM expects to invest approximately $60 million in transmission expansion projects, primarily attributable to the Allegheny Valley Connector (AVC), the Equitrans, L.P. Expansion project (EEP), which is designed to provide north-to-south capacity on the mainline Equitrans, L.P. system, including for deliveries to the MVP, and power plant projects. A portion of EEP commenced operations with interruptible service in the third quarter of 2019. EEP will provide capacity of approximately 600 MMcf per day and offers access to several markets through interconnects with Texas Eastern Transmission, Dominion Transmission and Columbia Gas
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Water Expansion. During the twelve months ended December 31, 2019, EQM invested approximately $37 million in the expansion of its fresh water delivery infrastructure. In 2020, EQM expects to invest approximately $20 million in the expansion of its fresh water delivery infrastructure in Pennsylvania and Ohio.
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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, natural gas liquids (NGLs) and oil prices and the effect thereon of the supply of associated natural gas from oil wells in other formations such as the Permian Basin;
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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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the availability and cost of capital on a satisfactory economic basis to fund EQT's operations and refinance existing indebtedness as it becomes due, any changes in EQT's credit ratings and effects of EQT’s credit support obligations on such availability;
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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, creditworthiness 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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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, including by use of large-scale, sequential, highly choreographed drilling and hydraulic fracturing;
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EQT’s ability to achieve anticipated efficiencies associated with its strategic plan and successfully execute on its announced de-levering plan;
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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/or the effectiveness of their replacements; and
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risk associated with cyber security, environmental activists and other threats.
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the rates we charge for our gathering, transmission, storage and water services;
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the level of our MVCs, firm gathering, transmission and storage capacity sold and the volumes of natural gas we gather, transport and store for our customers and our ability to provide produced water handling services, the volume of water delivered to, or stored for, our customers and the cost of water;
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our ability to successfully implement or execute on our business plan;
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regional, domestic and foreign supply (including, without limitation, associated natural gas produced from oil wells in other formations such as the Permian Basin) and perceptions of supply of natural gas; the level of demand and perceptions of demand in our end-use markets (which may be met or otherwise affected by production of associated gas and the availability of such gas in our end-use markets); and actual and anticipated future prices of natural gas and other commodities (and the volatility thereof), which may affect, among other things, production volumes, customer financial health, and our ability to renew and replace firm gathering, transmission and storage, and water services agreements;
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the effect of seasonal variations in temperature on the amount of natural gas that we gather, transport and store and the amount of water we deliver;
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the level of competition from other midstream energy companies in our geographic markets;
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the creditworthiness and defaults, if any, of our customers, including EQT;
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restrictions contained in our joint venture agreements;
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the amount and timing of distributions, if any, received by us under our joint venture agreements;
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the level of our operating and maintenance and general and administrative costs;
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the availability and price of alternative and competing fuel sources, and the rates of growth of alternative energy sources and consumer adoption of alternative energy sources relative to natural gas;
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regulatory action affecting the supply of, or demand for, natural gas, the rates we can charge on our assets, our contracts for services, our existing contracts, our operating costs and our operating flexibility;
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natural disasters, weather-related delays, casualty losses, third-party opposition to our operations in the form of protests, sabotage, intervention in regulatory or administrative proceedings, or lawsuits, and other matters beyond our control;
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our ability to achieve the anticipated benefits associated with the execution of the EQT Global GGA; and
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prevailing market conditions.
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our cash flows, including cash flow from operations and working capital borrowings;
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the level and timing of capital expenditures and capital contributions we make;
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the level of our operating and maintenance and general and administrative expenses;
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our ability to successfully identify and consummate joint ventures and other transactions, including strategic acquisitions, if any, and to successfully integrate those acquisitions into our business;
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the cost of our acquisitions, if any;
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our and our subsidiaries’ respective debt service requirements and other liabilities;
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distributions to the holders of our Series A Preferred Units prior to the EQM Merger;
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the timing of the consummation of the EQM Merger;
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Equitrans Midstream’s ability to service its payment obligations under the Intercompany Loan (as defined in Note 19);
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liquidity and financing requirements, including our ability to borrow funds and access capital markets on satisfactory terms;
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restrictions on distributions contained in our and our subsidiaries’ respective debt and joint venture agreements;
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the amount of our cash reserves; and
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other business risks affecting our cash levels.
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rates and charges for our 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 and certificated gathering 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;
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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, vandalism 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 or Eureka Midstream's, as applicable, 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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additional or more restrictive covenants that impose operating and financial restrictions on us and our subsidiaries;
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our subsidiaries to guarantee such debt and certain other debt; and
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us and our subsidiaries to provide collateral to secure such debt.
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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 Equitrans Midstream 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 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 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;
|
•
|
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 our outstanding common units; and
|
•
|
Our general partner decides whether to retain separate counsel, accountants or others to perform services for us.
|
•
|
how to allocate corporate opportunities among us and other affiliates;
|
•
|
whether to exercise its limited call right;
|
•
|
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;
|
•
|
how to exercise its voting rights with respect to the units it owns; and
|
•
|
whether or not to consent to any merger, consolidation or conversion of the partnership or amendment to our partnership agreement.
|
•
|
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;
|
•
|
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; and
|
•
|
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.
|
•
|
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;
|
•
|
approved by the vote of unitholders holding a majority of our outstanding common units, excluding any units owned by our general partner and its affiliates;
|
•
|
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
|
•
|
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.
|
•
|
our existing unitholders' proportionate ownership interest in us will decrease;
|
•
|
the amount of distributable cash flow on each unit may decrease;
|
•
|
our ability to maintain our current cash distribution level may be adversely affected;
|
•
|
the ratio of taxable income to distributions may increase;
|
•
|
the relative voting strength of each previously outstanding unit will be diminished; and
|
•
|
the market price of our common units may decline.
|
•
|
we were conducting business in a state but had not complied with that particular state's partnership statute; or
|
•
|
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.
|
•
|
changes in Equitrans Midstream’s, EQT's and our business, operations and prospects or market assessments thereof;
|
•
|
interest rates, general market, industry and economic conditions and other factors generally affecting the price of Equitrans Midstream common stock; and
|
•
|
federal, state and local legislation, governmental regulation and legal developments in the businesses and industry in which Equitrans Midstream and we operate.
|
•
|
we will be required to pay our costs relating to the EQM Merger, such as legal, accounting and financial advisory expenses, whether or not the EQM Merger is completed;
|
•
|
time and resources committed by the management of the EQM General Partner to matters relating to the EQM Merger could otherwise have been devoted to pursuing other beneficial opportunities; and
|
•
|
the market price of EQM common units could decline to the extent that the current market price reflects a market assumption that the EQM Merger will be completed.
|
•
|
any determination or course of action by the EQM General Partner or our Board will conclusively be deemed to be in “good faith” and shall not be subject to any other or different standards (including fiduciary standards) imposed by our Partnership Agreement if the resolution or course of action is approved by Special Approval; and
|
•
|
the EQM General Partner may consult with legal counsel, accountants, appraisers, management consultants, investment bankers and other consultants selected by it, and any act taken or omitted to be taken in reliance upon the opinion of such persons as to matters that the EQM General Partner reasonably believes to be within such person’s professional or expert competence shall be conclusively presumed to have been done or omitted in good faith and in accordance with such opinion.
|
•
|
Sierra Club, et al. v. U.S. Army Corps of Engineers, et al., consolidated under Case No. 18-1173, Fourth Circuit Court of Appeals (Fourth Circuit). In February 2018, the Sierra Club filed a lawsuit in the Fourth Circuit against the U.S. Army Corps of Engineers (the U.S. Army Corps). The lawsuit challenges the verification by the Huntington District of the U.S. Army Corps that Nationwide Permit 12, which generally authorizes discharges of dredge or fill material into waters of the United States and the construction of pipelines across such waters under Section 404 of the Clean Water
|
•
|
WVDEP Rulemaking Proceedings – Section 401 Nationwide Permit. 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 issued a new notice and comment period for further modifications of the 401 certification. On April 24, 2019, the WVDEP submitted the modification to the United States EPA for approval (since the WVDEP is also required to obtain the EPA's agreement to the modified 401 certification) and provided notice to the U.S. Army Corps. The EPA’s agreement to the WVDEP’s modification of its water quality certification was received in August 2019 and, accordingly, 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 U.S. Army Corps approved the WVDEP’s modification of its Nationwide Permit on January 24, 2020. The MVP Joint Venture submitted a new permit application on January 28, 2020 anticipating a permit decision in early 2020. However, the MVP Joint Venture cannot guarantee that the WVDEP's action will not be challenged or that the U.S. Army Corps Districts will act promptly or be deemed to have acted properly if challenged, in which case reverification may be further delayed.
|
•
|
Sierra Club, et al. v. U.S. Army Corps of Engineers et al., Case No. 18-1713, Fourth Circuit Court of Appeals. 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's decision to verify the MVP Joint Venture's use of Nationwide Permit 12 for stream crossings in Virginia. 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. Once the Huntington and Pittsburgh District issues are resolved as discussed above, the Norfolk District will be in the position to consider lifting the suspension of the verification for the MVP Joint Venture's use of Nationwide Permit 12. The administrative proceeding described above is addressing the issues raised by the court. However, the MVP Joint Venture cannot guarantee that the agencies’ actions will not be challenged or that the U.S. Army Corps Districts will act promptly or be deemed to have acted properly if challenged, in which case reverification may be further delayed.
|
•
|
Sierra Club, et al. v. U.S. Forest Service, et al., consolidated under Case No. 17-2399, Fourth Circuit Court of Appeals. In a different Fourth Circuit appeal filed in December 2017, the Sierra Club challenged a 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. 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. 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
|
•
|
Challenges to FERC Certificate, Court of Appeals for the District of Columbia Circuit (DC Circuit). 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. On February 19, 2019, the DC Circuit issued an order rejecting multiple consolidated petitions seeking direct review of the FERC order under the Natural Gas Act and certain challenges to the exercise by the MVP Joint Venture of eminent domain authority in Appalachian Voices, et al. v. FERC, et al., consolidated under Case No. 17-1271. No petitions for rehearing or petitions for rehearing en banc were filed by the April 5, 2019 deadline. The mandate was issued on April 17, 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 plaintiffs' complaint on September 28, 2018. On October 26, 2018, plaintiffs appealed to the DC Circuit 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 appeals of the final agency orders related to the MVP certificate in consolidated Case No. 17-1271 and Atlantic Coast Pipeline’s (ACP) certificate. The MVP Joint Venture filed a motion to dismiss the case as to some of the plaintiffs. On February 15, 2019, the DC Circuit entered an order holding this appeal in abeyance pending rulings on the appeals from the ACP and MVP FERC proceedings. ACP’s proceeding remains pending. Case No. 18-5322 remains in abeyance. If this challenge 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 the MVP Joint Venture cannot predict.
|
•
|
Mountain Valley Pipeline, LLC v. 6.56 Acres of Land et al., Case No. 18-1159, Fourth Circuit Court of Appeals. Several landowners filed challenges to the condemnation proceedings by which the MVP Joint Venture obtained access to their property in various U.S. District Courts. 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 consolidated these cases and issued two opinions in 2019, one granting the MVP Joint Venture immediate access for construction of the pipeline and the other finding that the MVP Joint Venture did not have to condemn the interest of coal owners and that coal owners are not entitled to assert claims in the condemnation proceedings for lost coal on tracts for which they do not own a surface interest being condemned. A group of landowners filed a writ of certiorari with the United States Supreme Court regarding the Fourth Circuit’s ruling on immediate access, which was denied on October 7, 2019. District court trials on just compensation are ongoing.
|
•
|
Greenbrier River Watershed Ass’n v. WVDEP, Circuit Court of Summers County, West Virginia. 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. The 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.
|
•
|
Sierra Club et al. v. U.S. Dep’t of Interior et al., Case No. 18-1082, Fourth Circuit Court of Appeals. On August 6, 2018, the Fourth Circuit held that the National Park Service (NPS) acted arbitrarily and capriciously in granting the ACP a right-of-way permit across the Blue Ridge Parkway. Specifically, the Fourth Circuit found that the permit cited the wrong source of legal authority and the NPS failed to make a “threshold determination that granting the right-of-way is ‘not inconsistent with the use of such lands for parkway purposes’ and the overall National Park System to which it belongs.” Even though the MVP Joint Venture is not named in the ACP litigation, the MVP route crosses the Blue Ridge Parkway roughly midway between mileposts 246 and 247 of the pipeline route and implicates some the
|
•
|
Wild Virginia et al. v. United States Department of the Interior; Case No. 19-1866, Fourth Circuit Court of Appeals. Petitioners filed a petition in the Fourth Circuit to challenge MVP’s Biological Opinion and Incidental Take Statement issued by the Department of the Interior’s Fish and Wildlife Service (FWS) which was approved in November 2017 (BiOp). Petitioners also requested a stay of the application of MVP’s BiOp during the pendency of the court case. FWS subsequently requested that the court approve a stay of the litigation until January 11, 2020. On August 15, 2019, the MVP Joint Venture submitted a project-wide voluntary suspension of construction activities that pose a risk of incidental take, based on the BiOp. On October 11, 2019, the Fourth Circuit issued an order approving the stay of the BiOp and held the litigation in abeyance until January 11, 2020 pending re-consultation between FWS and the FERC regarding FWS’s review of the BiOp. In response to the Fourth Circuit’s order, on October 15, 2019, the FERC issued an order to the MVP Joint Venture to cease all forward-construction progress. Subsequently, the FERC authorized certain limited construction activities to resume. On January 9, 2020, the Fourth Circuit granted FWS’ motion to hold the case in abeyance until March 11, 2020.
|
•
|
Cowpasture River Preservation Association, et al. v. U.S. Forest Service, et al., Case No. 18-1144, Fourth Circuit Court of Appeals. On December 13, 2018, in an unrelated case involving the ACP, the Fourth Circuit held that the USFS, 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. On February 25, 2019, the Fourth Circuit denied ACP’s petition for en banc rehearing. The federal government and ACP filed petitions to the United States Supreme Court on June 26, 2019 seeking judicial review of the Fourth Circuit's decision. On October 4, 2019, the Supreme Court formally accepted the Petitioners’ writ of certiorari. The oral arguments occurred on February 24, 2020. Based on general court practice, EQM anticipates that the Supreme Court will issue its decision by June 2020. The MVP Joint Venture is continuing to pursue multiple options to address the Appalachian Trail issue, including but not limited to, administrative, regulatory and legislative options.
|
•
|
Grand Jury Subpoena. 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 and other federal statutes as they relate to the construction of the MVP. The January 7, 2019 letter requested that the MVP Joint Venture and its members, contractors, suppliers and other entities involved in the construction of the MVP preserve documents related to the MVP generated from September 1, 2018 to the present. In a telephone call on February 4, 2019, the U.S. Attorney's Office confirmed that it has opened a criminal investigation. On February 11, 2019, the MVP Joint Venture received a grand jury subpoena from the U.S. Attorney's Office for the Western District of Virginia requesting certain documents related to the MVP from August 1, 2018 to the present. The MVP Joint Venture is complying with the letter and subpoena but cannot predict whether any action will ultimately be brought by the U.S. Attorney's Office or what the outcome of such an action would be. The MVP Joint Venture began a rolling production of documents responsive to the subpoena after the U.S. Attorney’s office narrowed its subpoena inquiry to five farms in Virginia containing twenty streams or wetlands.
|
•
|
Paylor et al. v. Mountain Valley Pipeline, LLC, Case No. CL18-4874-00, Circuit Court of Henrico County. On December 7, 2018, the Virginia Department of Environmental Quality and the State Water Control Board (the Plaintiffs) filed a lawsuit against the MVP Joint Venture in the Circuit Court of Henrico County 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. On October 11, 2019, the Plaintiffs issued a consent decree to the MVP Joint Venture. As part of the consent decree, the MVP Joint Venture would agree to court-supervised compliance with environmental laws and third-party monitoring of erosion controls. The MVP Joint Venture would also agree to pay $2.15 million in penalties. The consent decree was signed by the judge on December 11, 2019, and the penalty was paid in December 2019 and accepted by the agency on January 7, 2020. Beyond the civil penalty, MVP is required to complete additional corrective actions and comply with reporting requirements outlined in the consent decree.
|
|
|
As of and for the Years Ended December 31,
|
||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Statements of Consolidated Operations
|
|
|
|
(Thousands, except per unit amounts)
|
|
|
||||||||||||||
Operating revenues
|
|
$
|
1,630,242
|
|
|
$
|
1,495,098
|
|
|
$
|
895,558
|
|
|
$
|
735,272
|
|
|
$
|
632,936
|
|
Operating income
|
|
204,186
|
|
|
726,653
|
|
|
620,705
|
|
|
527,856
|
|
|
451,036
|
|
|||||
Net income
|
|
162,082
|
|
|
671,348
|
|
|
610,360
|
|
|
537,954
|
|
|
455,126
|
|
|||||
Net income attributable to EQM
|
|
183,373
|
|
|
668,002
|
|
|
609,626
|
|
|
537,954
|
|
|
455,126
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income per limited partner unit (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic
|
|
$
|
0.58
|
|
|
$
|
2.43
|
|
|
$
|
5.19
|
|
|
$
|
5.21
|
|
|
$
|
4.71
|
|
Diluted
|
|
0.56
|
|
|
2.43
|
|
|
5.19
|
|
|
5.21
|
|
|
4.70
|
|
|||||
Cash distributions paid per limited partner unit
|
|
$
|
4.595
|
|
|
$
|
4.295
|
|
|
$
|
3.655
|
|
|
$
|
3.05
|
|
|
$
|
2.505
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total assets
|
|
$
|
11,815,019
|
|
|
$
|
9,456,121
|
|
|
$
|
7,998,835
|
|
|
$
|
3,075,840
|
|
|
$
|
2,833,358
|
|
Long-term debt (b)
|
|
$
|
5,761,999
|
|
|
$
|
4,081,639
|
|
|
$
|
1,453,352
|
|
|
$
|
985,732
|
|
|
$
|
493,401
|
|
(a)
|
Net income attributable to the EQM-RMP Merger, the Drop-Down Transaction, the October 2016 Acquisition and the NWV Gathering Acquisition for the periods prior to July 23, 2018, May 1, 2018, October 1, 2016 and March 17, 2015, respectively, was not allocated, as applicable, 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 for further discussion.
|
(b)
|
Includes outstanding borrowings under EQM's and Eureka Midstream's credit facilities.
|
(a)
|
Includes the pre-acquisition results of the Drop-Down Transaction and the EQM-RMP Merger, which were effective May 1, 2018 and July 23, 2018, respectively. The recasts are 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.
|
(b)
|
Includes approximately $59.1 million for the year ended December 31, 2019 related to non-operating assets acquired from Equitrans Midstream in the Shared Assets Transaction (defined in Note 2) that primarily support EQM's gathering activities. See Note 2 for further detail.
|
(c)
|
Includes approximately $25.9 million of capital expenditures related to noncontrolling interests in Eureka Midstream for the year ended December 31, 2019.
|
|
|
Years Ended December 31,
|
||||||||||||||||
|
|
2019
|
|
2018
|
|
% Change
|
|
2017
|
|
% Change
|
||||||||
FINANCIAL DATA
|
|
(Thousands, except per day amounts)
|
||||||||||||||||
Firm reservation fee revenues
|
|
$
|
356,569
|
|
|
$
|
356,725
|
|
|
—
|
|
|
$
|
348,193
|
|
|
2.5
|
|
Volumetric-based fee revenues
|
|
33,951
|
|
|
30,076
|
|
|
12.9
|
|
|
23,793
|
|
|
26.4
|
|
|||
Total operating revenues
|
|
390,520
|
|
|
386,801
|
|
|
1.0
|
|
|
371,986
|
|
|
4.0
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating and maintenance
|
|
33,989
|
|
|
39,563
|
|
|
(14.1
|
)
|
|
33,908
|
|
|
16.7
|
|
|||
Selling, general and administrative
|
|
26,865
|
|
|
31,936
|
|
|
(15.9
|
)
|
|
31,922
|
|
|
—
|
|
|||
Depreciation
|
|
51,935
|
|
|
49,723
|
|
|
4.4
|
|
|
58,689
|
|
|
(15.3
|
)
|
|||
Total operating expenses
|
|
112,789
|
|
|
121,222
|
|
|
(7.0
|
)
|
|
124,519
|
|
|
(2.6
|
)
|
|||
Operating income
|
|
$
|
277,731
|
|
|
$
|
265,579
|
|
|
4.6
|
|
|
$
|
247,467
|
|
|
7.3
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Equity income
|
|
$
|
163,279
|
|
|
$
|
61,778
|
|
|
164.3
|
|
|
$
|
22,171
|
|
|
178.6
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
OPERATIONAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Transmission pipeline throughput (BBtu per day)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Firm capacity reservation
|
|
2,823
|
|
|
2,903
|
|
|
(2.8
|
)
|
|
2,399
|
|
|
21.0
|
|
|||
Volumetric-based services
|
|
90
|
|
|
59
|
|
|
52.5
|
|
|
37
|
|
|
59.5
|
|
|||
Total transmission pipeline throughput
|
|
2,913
|
|
|
2,962
|
|
|
(1.7
|
)
|
|
2,436
|
|
|
21.6
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Average contracted firm transmission reservation commitments (BBtu per day)
|
|
3,966
|
|
|
3,909
|
|
|
1.5
|
|
|
3,627
|
|
|
7.8
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Capital expenditures(a)
|
|
$
|
59,313
|
|
|
$
|
114,450
|
|
|
(48.2
|
)
|
|
$
|
111,102
|
|
|
3.0
|
|
(a)
|
Transmission capital expenditures do not include capital contributions made to the MVP Joint Venture for the MVP and MVP Southgate projects of approximately $774.6 million, $913.2 million and $159.6 million for the years ended December 31, 2019, 2018 and 2017, respectively.
|
|
Years Ended December 31,
|
|||||||||||||||
|
2019
|
|
2018(a)
|
|
% Change
|
|
2017(a)
|
|
% Change
|
|||||||
|
(Thousands)
|
|||||||||||||||
FINANCIAL DATA
|
|
|
|
|
|
|
|
|
|
|||||||
Water service revenues
|
$
|
79,791
|
|
|
$
|
111,227
|
|
|
(28.3
|
)
|
|
$
|
13,605
|
|
|
717.5
|
|
|
|
|
|
|
|
|
|
|
|||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|||||||
Operating and maintenance
|
34,638
|
|
|
44,152
|
|
|
(21.5
|
)
|
|
5,598
|
|
|
688.7
|
|||
Selling, general and administrative
|
2,933
|
|
|
5,895
|
|
|
(50.2
|
)
|
|
347
|
|
|
1,598.8
|
|||
Depreciation
|
26,915
|
|
|
23,513
|
|
|
14.5
|
|
|
3,515
|
|
|
568.9
|
|||
Total operating expenses
|
64,486
|
|
|
73,560
|
|
|
(12.3
|
)
|
|
9,460
|
|
|
677.6
|
|||
Operating income
|
$
|
15,305
|
|
|
$
|
37,667
|
|
|
(59.4
|
)
|
|
$
|
4,145
|
|
|
808.7
|
|
|
|
|
|
|
|
|
|
|
|||||||
OPERATIONAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Water services volumes (MMgal)
|
1,808
|
|
|
2,088
|
|
|
(13.4
|
)
|
|
226
|
|
|
823.9
|
|||
Capital expenditures
|
$
|
37,457
|
|
|
$
|
23,537
|
|
|
59.1
|
|
|
$
|
6,233
|
|
|
277.6
|
(a)
|
Includes 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,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Thousands)
|
||||||||||
Net income
|
$
|
162,082
|
|
|
$
|
671,348
|
|
|
$
|
610,360
|
|
Add:
|
|
|
|
|
|
||||||
Net interest expense
|
209,984
|
|
|
122,094
|
|
|
36,955
|
|
|||
Depreciation
|
223,160
|
|
|
171,914
|
|
|
107,161
|
|
|||
Amortization of intangible assets
|
53,258
|
|
|
41,547
|
|
|
5,540
|
|
|||
Impairment of long-lived assets (a)
|
854,307
|
|
|
261,941
|
|
|
—
|
|
|||
Preferred Interest payments
|
10,984
|
|
|
10,984
|
|
|
10,984
|
|
|||
Non-cash long-term compensation expense
|
255
|
|
|
1,275
|
|
|
242
|
|
|||
Separation and other transaction costs
|
19,344
|
|
|
7,761
|
|
|
—
|
|
|||
Less:
|
|
|
|
|
|
||||||
Equity income
|
(163,279
|
)
|
|
(61,778
|
)
|
|
(22,171
|
)
|
|||
AFUDC – equity
|
(5,161
|
)
|
|
(5,570
|
)
|
|
(5,110
|
)
|
|||
Adjusted EBITDA attributable to noncontrolling interest (b)
|
(26,503
|
)
|
|
—
|
|
|
—
|
|
|||
Adjusted EBITDA attributable to RMP prior to merger (c)
|
—
|
|
|
(160,128
|
)
|
|
(33,457
|
)
|
|||
Adjusted EBITDA attributable to the Drop-Down Transaction (d)
|
—
|
|
|
(63,853
|
)
|
|
(21,006
|
)
|
|||
Adjusted EBITDA
|
$
|
1,338,431
|
|
|
$
|
997,535
|
|
|
$
|
689,498
|
|
Less:
|
|
|
|
|
|
|
|
||||
Net interest expense excluding interest income on the Preferred Interest (e)
|
(213,360
|
)
|
|
(124,198
|
)
|
|
(42,999
|
)
|
|||
Capitalized interest and AFUDC – debt (e)
|
(28,631
|
)
|
|
(9,873
|
)
|
|
(4,120
|
)
|
|||
Ongoing maintenance capital expenditures net of expected reimbursements(e)(f)
|
(61,108
|
)
|
|
(46,939
|
)
|
|
(27,609
|
)
|
|||
Series A Preferred Unit distributions
|
(73,981
|
)
|
|
—
|
|
|
—
|
|
|||
Distributable cash flow (g)
|
$
|
961,351
|
|
|
$
|
816,525
|
|
|
$
|
614,770
|
|
|
|
|
|
|
|
||||||
Net cash provided by operating activities
|
$
|
1,049,407
|
|
|
$
|
1,187,239
|
|
|
$
|
681,848
|
|
Adjustments:
|
|
|
|
|
|
||||||
Capitalized interest and AFUDC – debt(e)
|
(28,631
|
)
|
|
(9,873
|
)
|
|
(4,120
|
)
|
|||
Principal payments received on the Preferred Interest
|
4,661
|
|
|
4,406
|
|
|
4,166
|
|
|||
Ongoing maintenance capital expenditures net of reimbursements (e)(f)
|
(61,108
|
)
|
|
(46,939
|
)
|
|
(27,609
|
)
|
|||
Adjusted EBITDA attributable to noncontrolling interest (b)
|
(26,503
|
)
|
|
—
|
|
|
—
|
|
|||
Adjusted EBITDA attributable to RMP prior to merger (c)
|
—
|
|
|
(160,128
|
)
|
|
(33,457
|
)
|
|||
Adjusted EBITDA attributable to the Drop-Down Transaction (d)
|
—
|
|
|
(63,853
|
)
|
|
(21,006
|
)
|
|||
Series A Preferred Unit distributions
|
(73,981
|
)
|
|
—
|
|
|
—
|
|
|||
Other, including changes in working capital
|
97,506
|
|
|
(94,327
|
)
|
|
14,948
|
|
|||
Distributable cash flow (g)
|
$
|
961,351
|
|
|
$
|
816,525
|
|
|
$
|
614,770
|
|
(a)
|
See Note 3 for further information on the impairments to long-lived assets.
|
(b)
|
Reflects adjusted EBITDA attributable to noncontrolling interest associated with the third-party ownership interest in Eureka Midstream. Adjusted EBITDA attributable to noncontrolling interest for the year ended December 31, 2019 was calculated as net loss of $21.3 million, plus depreciation of $7.5 million, plus amortization of intangible assets of $3.4 million, plus impairments of long-lived assets of $34.0 million, and plus interest expense of $2.9 million.
|
(c)
|
Adjusted EBITDA attributable to RMP for the period prior to July 23, 2018 was subtracted as part of 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, plus depreciation of $31.4 million and $7.5 million, respectively, and plus non-cash compensation expense of $0.9 million and less than $0.1 million, respectively.
|
(d)
|
Adjusted EBITDA attributable to the Drop-Down Transaction for the period prior to May 1, 2018 was subtracted as part of 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 $44.4 million and $13.4 million, respectively, plus depreciation of $5.8 million and $2.2 million, respectively, and plus 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.
|
(e)
|
Excludes amounts related to the noncontrolling interest share of Eureka Midstream.
|
(f)
|
Ongoing maintenance capital expenditures net of expected reimbursements excludes ongoing maintenance that EQM expects to be reimbursed or that was reimbursed by Equitrans Midstream in 2019, or by EQT in periods prior to the Separation, under the terms of the EQT Omnibus Agreement. In addition, for the year ended December 31, 2018, ongoing maintenance capital expenditures net of expected reimbursements excluded $1.1 million of ongoing maintenance capital expenditures attributable to RMP prior to the EQM-RMP Merger.
|
(g)
|
EQM believes that calculating distributable cash flow without deducting separation and other transaction costs provides investors with greater insight into the period-to-period ability of EQM’s ongoing assets and operations to generate cash flow. If separation and other transaction costs were deducted from the calculation, EQM’s distributable cash flow for the years ended December 31, 2019 and 2018 would have been $942.0 million and $808.8 million, respectively.
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Thousands)
|
|||||||||||
Expansion capital expenditures (a)(b)(c)
|
|
$
|
925,387
|
|
|
$
|
803,347
|
|
|
$
|
328,529
|
|
Maintenance capital expenditures (c)
|
|
65,187
|
|
|
51,891
|
|
|
43,328
|
|
|||
Total capital expenditures
|
|
990,574
|
|
|
855,238
|
|
|
371,857
|
|
|||
Plus: accrued capital expenditures at the end of prior period (d)
|
|
108,890
|
|
|
90,655
|
|
|
26,678
|
|
|||
Plus: accrued capital expenditures at acquisition on April 10, 2019 (d)
|
|
8,759
|
|
|
—
|
|
|
—
|
|
|||
Plus: accrued capital expenditures at acquisition on November 13, 2017 (d)
|
|
—
|
|
|
—
|
|
|
72,271
|
|
|||
Less: accrued capital expenditures at the end of current period (d)
|
|
(85,753
|
)
|
|
(108,890
|
)
|
|
(90,655
|
)
|
|||
Total cash capital expenditures
|
|
$
|
1,022,470
|
|
|
$
|
837,003
|
|
|
$
|
380,151
|
|
(a)
|
Expansion capital expenditures do not include capital contributions made to the MVP Joint Venture of $774.6 million, $913.2 million and $159.6 million related to the MVP and MVP Southgate projects for the years ended December 31, 2019, 2018 and 2017, respectively.
|
(b)
|
Expansion capital expenditures for the year ended December 31, 2019 includes approximately $59.1 million related to the non-operating assets acquired from Equitrans Midstream in the Shared Assets Transaction that primarily support EQM's gathering activities. See Note 2 for further detail.
|
(c)
|
Includes approximately $22.5 million of expansion capital expenditures and $3.4 million of maintenance capital expenditures related to noncontrolling interests in Eureka Midstream for the year ended December 31, 2019.
|
(d)
|
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-
|
|
Negative
|
Fitch
|
|
BBB-
|
|
Negative
|
|
|
Total
|
|
2020
|
|
2021-2022
|
|
2023-2024
|
|
2025+
|
||||||||||
|
|
(Thousands)
|
||||||||||||||||||
Long-term debt (a)
|
|
$
|
4,900,000
|
|
|
$
|
—
|
|
|
$
|
1,400,000
|
|
|
$
|
1,600,000
|
|
|
$
|
1,900,000
|
|
Credit facility borrowings (b)
|
|
902,500
|
|
|
—
|
|
|
292,500
|
|
|
610,000
|
|
|
—
|
|
|||||
Interest payments on senior notes (c)
|
|
1,850,292
|
|
|
175,375
|
|
|
350,750
|
|
|
270,573
|
|
|
1,053,594
|
|
|||||
Purchase obligations (d)
|
|
24,062
|
|
|
24,062
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Operating lease obligations (e)
|
|
65,028
|
|
|
12,504
|
|
|
18,223
|
|
|
9,573
|
|
|
24,728
|
|
|||||
Total contractual obligations
|
|
$
|
7,741,882
|
|
|
$
|
211,941
|
|
|
$
|
2,061,473
|
|
|
$
|
2,490,146
|
|
|
$
|
2,978,322
|
|
(a)
|
Includes $3.5 billion in aggregate principal amount of EQM's senior notes and $1.4 billion associated with the term loans issued pursuant to the 2019 EQM Term Loan Agreement as of December 31, 2019. See Note 12 for further information.
|
(b)
|
Credit facility borrowings were classified based on the termination date of the credit facility agreements. As of December 31, 2019, EQM had aggregate credit facility borrowings outstanding of approximately $610 million and $293 million on its $3 Billion Facility and the Eureka Credit Facility, respectively. See Note 12 for further information.
|
(c)
|
Interest payments exclude interest related to the $3 Billion Facility, Eureka Credit Facility and term loans under the 2019 EQM Term Loan Agreement as the interest rates on the credit facility borrowings and term loan are variable.
|
(d)
|
Purchase obligations represent agreements to purchase goods or services that are enforceable, legally binding and specify all significant terms, including the approximate timing of the transaction. As of December 31, 2019, EQM's purchase obligations included commitments for capital expenditures, operating expenses and service contracts.
|
(e)
|
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, 2019, 2018 and 2017
|
|
Statements of Consolidated Cash Flows for the Years Ended December 31, 2019, 2018 and 2017
|
|
Consolidated Balance Sheets as of December 31, 2019 and 2018
|
|
Statements of Consolidated Equity for the Years Ended December 31, 2019, 2018 and 2017
|
|
Notes to Consolidated Financial Statements
|
/s/ Ernst & Young, LLP
|
|
We have served as the Partnership's auditor since 2012.
|
|
Pittsburgh, Pennsylvania
|
|
February 27, 2020
|
|
/s/ Ernst & Young, LLP
|
|
Pittsburgh, Pennsylvania
|
|
February 27, 2020
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Thousands, except per unit amounts)
|
||||||||||
Operating revenues (b)
|
$
|
1,630,242
|
|
|
$
|
1,495,098
|
|
|
$
|
895,558
|
|
Operating expenses:
|
|
|
|
|
|
|
|
||||
Operating and maintenance (c)
|
165,367
|
|
|
163,451
|
|
|
84,831
|
|
|||
Selling, general and administrative (c)
|
110,620
|
|
|
121,831
|
|
|
77,321
|
|
|||
Separation and other transaction costs
|
19,344
|
|
|
7,761
|
|
|
—
|
|
|||
Depreciation
|
223,160
|
|
|
171,914
|
|
|
107,161
|
|
|||
Amortization of intangible assets
|
53,258
|
|
|
41,547
|
|
|
5,540
|
|
|||
Impairments of long-lived assets (d)
|
854,307
|
|
|
261,941
|
|
|
—
|
|
|||
Total operating expenses
|
1,426,056
|
|
|
768,445
|
|
|
274,853
|
|
|||
Operating income
|
204,186
|
|
|
726,653
|
|
|
620,705
|
|
|||
Equity income (e)
|
163,279
|
|
|
61,778
|
|
|
22,171
|
|
|||
Other income
|
4,601
|
|
|
5,011
|
|
|
4,439
|
|
|||
Net interest expense (f)
|
209,984
|
|
|
122,094
|
|
|
36,955
|
|
|||
Net income
|
162,082
|
|
|
671,348
|
|
|
610,360
|
|
|||
Net (loss) income attributable to noncontrolling interests
|
(21,291
|
)
|
|
3,346
|
|
|
734
|
|
|||
Net income attributable to EQM
|
$
|
183,373
|
|
|
$
|
668,002
|
|
|
$
|
609,626
|
|
|
|
|
|
|
|
||||||
Calculation of limited partner common unit interest in net income:
|
|
|
|
|
|
|
|
||||
Net income attributable to EQM
|
$
|
183,373
|
|
|
$
|
668,002
|
|
|
$
|
609,626
|
|
Less: holders of Series A Preferred Units interest in net income
|
(73,981
|
)
|
|
—
|
|
|
—
|
|
|||
Less pre-acquisition net income allocated to EQT
|
—
|
|
|
(164,242
|
)
|
|
(37,722
|
)
|
|||
Less general partner interest in net income - general partner units
|
—
|
|
|
(6,104
|
)
|
|
(10,060
|
)
|
|||
Less general partner interest in net income - IDRs
|
—
|
|
|
(255,927
|
)
|
|
(143,531
|
)
|
|||
Limited partners' (common unitholders) interest in net income
|
$
|
109,392
|
|
|
$
|
241,729
|
|
|
$
|
418,313
|
|
|
|
|
|
|
|
||||||
Net income per limited partner common unit – basic (g)
|
$
|
0.58
|
|
|
$
|
2.43
|
|
|
$
|
5.19
|
|
Net income per limited partner common unit – diluted (g)
|
$
|
0.56
|
|
|
$
|
2.43
|
|
|
$
|
5.19
|
|
|
|
|
|
|
|
||||||
Weighted average limited partner common units outstanding – basic
|
189,085
|
|
|
99,303
|
|
|
80,603
|
|
|||
Weighted average limited partner common units outstanding – diluted
|
196,085
|
|
|
99,303
|
|
|
80,603
|
|
|||
|
|
|
|
|
|
||||||
Cash distributions declared per common unit (h)
|
$
|
4.63
|
|
|
$
|
4.40
|
|
|
$
|
3.83
|
|
(a)
|
As discussed in Note 1, EQM's consolidated financial statements have been retrospectively recast to include the pre-acquisition results of 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 $1,122.6 million, $1,111.3 million and $665.9 million for the years ended December 31, 2019, 2018 and 2017, respectively. See Note 8.
|
(c)
|
For the year ended December 31, 2019, operating and maintenance expense included approximately $52.7 million in charges from Equitrans Midstream Corporation. In the Successor period (defined in Note 1) from November 13, 2018 to December 31, 2018, operating and maintenance expense did not include any charges from Equitrans Midstream Corporation. In the Predecessor period from January 1, 2018 to November 12, 2018, and for the year ended December 31, 2017, operating and maintenance expense included charges from EQT of $49.8 million and $40.2 million, respectively. For the year ended December 31, 2019 and for the period from November 13, 2018 to December 31, 2018, selling, general and administrative expense included charges from Equitrans Midstream Corporation of $89.2 million and $16.3 million, respectively. In the Predecessor period from January 1, 2018 to November 12, 2018, and for the year ended December 31, 2017, selling, general and administrative expense included charges from EQT of $81.7 million and $72.6 million, respectively. See Note 8.
|
(d)
|
See Note 3 for disclosure regarding impairments of long-lived assets.
|
(e)
|
Represents equity income from Mountain Valley Pipeline, LLC (the MVP Joint Venture). See Note 9.
|
(f)
|
For the years ended December 31, 2019, 2018 and 2017, net interest expense included interest income on the preferred interest that EQM has in EQT Energy Supply, LLC (EES) (the Preferred Interest) of $6.3 million, $6.6 million and $6.8 million, respectively.
|
(g)
|
See Note 13 for disclosure regarding EQM's calculation of net income per limited partner unit (basic and diluted).
|
(h)
|
Represents the cash distributions declared related to the period presented. See Note 10.
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Thousands)
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|
||||
Net income
|
$
|
162,082
|
|
|
$
|
671,348
|
|
|
$
|
610,360
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
||||
Depreciation
|
223,160
|
|
|
171,914
|
|
|
107,161
|
|
|||
Amortization of intangible assets
|
53,258
|
|
|
41,547
|
|
|
5,540
|
|
|||
Impairments of long-lived assets (b)
|
854,307
|
|
|
261,941
|
|
|
—
|
|
|||
Equity income (c)
|
(163,279
|
)
|
|
(61,778
|
)
|
|
(22,171
|
)
|
|||
AFUDC – equity
|
(5,162
|
)
|
|
(5,570
|
)
|
|
(5,110
|
)
|
|||
Non-cash long term compensation expense
|
255
|
|
|
1,275
|
|
|
242
|
|
|||
Changes in other assets and liabilities:
|
|
|
|
|
|
|
|
||||
Accounts receivable
|
17,099
|
|
|
(48,046
|
)
|
|
(24,583
|
)
|
|||
Accounts payable
|
(89,210
|
)
|
|
94,961
|
|
|
2,853
|
|
|||
Other assets and other liabilities
|
(3,103
|
)
|
|
59,647
|
|
|
7,556
|
|
|||
Net cash provided by operating activities
|
1,049,407
|
|
|
1,187,239
|
|
|
681,848
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
||||
Capital expenditures
|
(1,022,470
|
)
|
|
(837,003
|
)
|
|
(380,151
|
)
|
|||
Bolt-on Acquisition (Note 2), net of cash acquired
|
(837,231
|
)
|
|
—
|
|
|
—
|
|
|||
Drop-Down Transaction (Note 2)
|
—
|
|
|
(1,193,160
|
)
|
|
—
|
|
|||
Capital contributions to the MVP Joint Venture
|
(774,593
|
)
|
|
(913,195
|
)
|
|
(159,550
|
)
|
|||
Purchase of interests in the MVP Joint Venture
|
—
|
|
|
(11,302
|
)
|
|
—
|
|
|||
Principal payments received on the Preferred Interest (Note 2)
|
4,661
|
|
|
4,406
|
|
|
4,166
|
|
|||
Net cash used in investing activities
|
(2,629,633
|
)
|
|
(2,950,254
|
)
|
|
(535,535
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
||||
Proceeds from credit facility borrowings
|
2,402,000
|
|
|
3,427,500
|
|
|
544,000
|
|
|||
Payments on credit facility borrowings
|
(2,397,000
|
)
|
|
(3,268,500
|
)
|
|
(344,000
|
)
|
|||
Pay-down of long-term debt associated with Bolt-on Acquisition (Note 2)
|
(28,325
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from the issuance of long-term debt
|
1,400,000
|
|
|
2,500,000
|
|
|
—
|
|
|||
Proceeds from the issuance of Series A Preferred Units, net of offering costs
|
1,158,313
|
|
|
—
|
|
|
—
|
|
|||
Net contributions from EQT
|
—
|
|
|
3,001
|
|
|
29,711
|
|
|||
Acquisition of 25% of Strike Force Midstream LLC
|
—
|
|
|
(175,000
|
)
|
|
—
|
|
|||
Capital contributions
|
711
|
|
|
16,790
|
|
|
9,790
|
|
|||
Distributions paid to unitholders
|
(905,878
|
)
|
|
(736,145
|
)
|
|
(442,229
|
)
|
|||
Distributions paid to holders of Series A Preferred Units
|
(48,480
|
)
|
|
—
|
|
|
—
|
|
|||
Distributions paid to noncontrolling interest
|
—
|
|
|
(750
|
)
|
|
—
|
|
|||
Debt discount, debt issuance costs and credit facility origination fees
|
(2,870
|
)
|
|
(40,966
|
)
|
|
(2,257
|
)
|
|||
Net cash provided by (used in) financing activities
|
1,578,471
|
|
|
1,725,930
|
|
|
(204,985
|
)
|
|||
|
|
|
|
|
|
||||||
Net change in cash and cash equivalents
|
(1,755
|
)
|
|
(37,085
|
)
|
|
(58,672
|
)
|
|||
Cash and cash equivalents at beginning of year (d)
|
17,515
|
|
|
54,600
|
|
|
113,272
|
|
|||
Cash and cash equivalents at end of year
|
$
|
15,760
|
|
|
$
|
17,515
|
|
|
$
|
54,600
|
|
|
|
|
|
|
|
||||||
Cash paid during the year for:
|
|
|
|
|
|
|
|
||||
Interest, net of amount capitalized
|
$
|
216,592
|
|
|
$
|
54,154
|
|
|
$
|
43,794
|
|
Non-cash activity during the year:
|
|
|
|
|
|
|
|
||||
(Decrease) increase in capital contribution receivable from EQT
|
$
|
—
|
|
|
$
|
(12,924
|
)
|
|
$
|
12,411
|
|
(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)
|
See Note 3 for disclosure regarding impairments of long-lived assets.
|
(c)
|
Represents equity income from the MVP Joint Venture. See Note 9.
|
(d)
|
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.
|
|
2019
|
|
2018
|
||||
|
(Thousands, except number of units)
|
||||||
ASSETS
|
|
|
|
|
|||
Current assets:
|
|
|
|
|
|||
Cash and cash equivalents
|
$
|
15,760
|
|
|
$
|
17,515
|
|
Accounts receivable (net of allowance for doubtful accounts of $285 and $75 as of December 31, 2019 and 2018, respectively) (a)
|
254,109
|
|
|
254,390
|
|
||
Other current assets
|
25,004
|
|
|
14,909
|
|
||
Total current assets
|
294,873
|
|
|
286,814
|
|
||
|
|
|
|
||||
Property, plant and equipment
|
8,572,499
|
|
|
6,367,530
|
|
||
Less: accumulated depreciation
|
(857,377
|
)
|
|
(560,902
|
)
|
||
Net property, plant and equipment
|
7,715,122
|
|
|
5,806,628
|
|
||
|
|
|
|
||||
Investment in unconsolidated entity
|
2,324,108
|
|
|
1,510,289
|
|
||
Goodwill (b)
|
486,698
|
|
|
1,123,813
|
|
||
Net intangible assets
|
797,439
|
|
|
576,113
|
|
||
Other assets
|
196,779
|
|
|
152,464
|
|
||
Total assets
|
$
|
11,815,019
|
|
|
$
|
9,456,121
|
|
|
|
|
|
||||
LIABILITIES AND EQUITY
|
|
|
|
|
|||
Current liabilities:
|
|
|
|
|
|||
Accounts payable (c)
|
$
|
126,786
|
|
|
$
|
207,877
|
|
Due to Equitrans Midstream
|
39,009
|
|
|
44,509
|
|
||
Capital contribution payable to the MVP Joint Venture
|
45,150
|
|
|
169,202
|
|
||
Accrued interest
|
73,366
|
|
|
80,199
|
|
||
Accrued liabilities
|
31,550
|
|
|
20,672
|
|
||
Total current liabilities
|
315,861
|
|
|
522,459
|
|
||
|
|
|
|
||||
Credit facility borrowings
|
902,500
|
|
|
625,000
|
|
||
Long-term debt (d)
|
4,859,499
|
|
|
3,456,639
|
|
||
Regulatory and other long-term liabilities
|
78,397
|
|
|
38,724
|
|
||
Total liabilities
|
6,156,257
|
|
|
4,642,822
|
|
||
|
|
|
|
||||
Equity:
|
|
|
|
|
|||
Series A Preferred Units (24,605,291 and 0 units issued and outstanding at December 31, 2019 and 2018, respectively)
|
1,183,814
|
|
|
—
|
|
||
Common units (200,457,630 and 120,457,638 units issued and outstanding at December 31, 2019 and 2018, respectively)
|
4,020,601
|
|
|
4,783,673
|
|
||
Class B units (7,000,000 and 0 units issued and outstanding at December 31, 2019 and 2018, respectively)
|
(2,822
|
)
|
|
—
|
|
||
General partner units (0 and 1,443,015 units issued and outstanding at December 31, 2019 and 2018, respectively)
|
—
|
|
|
29,626
|
|
||
Noncontrolling interest (e)
|
457,169
|
|
|
—
|
|
||
Total equity
|
5,658,762
|
|
|
4,813,299
|
|
||
Total liabilities and equity
|
$
|
11,815,019
|
|
|
$
|
9,456,121
|
|
(a)
|
Accounts receivable as of December 31, 2019 and 2018 included approximately $175.2 million and $174.8 million, respectively, of related party accounts receivable from EQT.
|
(b)
|
See Note 3 for disclosures regarding impairments to goodwill.
|
(c)
|
Accounts payable as of December 31, 2018 included approximately $34.0 million of related party accounts payable to EQT. There was no related party balance with EQT included in accounts payable as of December 31, 2019.
|
(d)
|
As of December 31, 2019, EQM had aggregate credit facility borrowings outstanding of approximately $610 million and $293 million on its $3 Billion Facility and the Eureka Credit Facility, respectively (both defined in Note 12). As of December 31, 2018, EQM had credit facility borrowings outstanding of approximately $625 million on its $3 Billion Facility. See Note 12 for further detail.
|
(e)
|
Noncontrolling interest as of December 31, 2019 represents third-party ownership in Eureka Midstream. See Note 2 for further information.
|
|
|
|
Limited Partners
|
|
|
|
|
|
|
||||||||||||||||||
|
Predecessor Equity
|
|
Series A Preferred Units
|
|
Common Units
|
|
Class B Units
|
|
General Partner
|
|
Noncontrolling Interest
|
|
Total Equity
|
||||||||||||||
|
(Thousands)
|
||||||||||||||||||||||||||
Balance at January 1, 2017
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,008,510
|
|
|
$
|
—
|
|
|
$
|
(14,956
|
)
|
|
$
|
—
|
|
|
$
|
1,993,554
|
|
Net income
|
37,722
|
|
|
—
|
|
|
418,313
|
|
|
—
|
|
|
153,591
|
|
|
734
|
|
|
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
|
|
|
$
|
—
|
|
|
$
|
2,147,706
|
|
|
$
|
—
|
|
|
$
|
1,252
|
|
|
$
|
173,472
|
|
|
$
|
6,238,864
|
|
Net income
|
164,242
|
|
|
—
|
|
|
241,729
|
|
|
—
|
|
|
262,031
|
|
|
3,346
|
|
|
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
|
—
|
|
|
—
|
|
|
1,068
|
|
|
—
|
|
|
—
|
|
|
(176,068
|
)
|
|
(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
|
|
Net income
|
—
|
|
|
73,981
|
|
|
108,970
|
|
|
(1,345
|
)
|
|
1,767
|
|
|
(21,291
|
)
|
|
162,082
|
|
|||||||
Capital contributions
|
—
|
|
|
—
|
|
|
711
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
711
|
|
|||||||
Equity-based compensation plans
|
—
|
|
|
—
|
|
|
255
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
255
|
|
|||||||
Distributions paid to unitholders
|
—
|
|
|
—
|
|
|
(830,703
|
)
|
|
—
|
|
|
(75,175
|
)
|
|
—
|
|
|
(905,878
|
)
|
|||||||
Distributions paid to holders of Series A Preferred Units
|
—
|
|
|
(48,480
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(48,480
|
)
|
|||||||
Equity restructuring associated with the EQM IDR Transaction
|
—
|
|
|
—
|
|
|
(42,305
|
)
|
|
(1,477
|
)
|
|
43,782
|
|
|
—
|
|
|
—
|
|
|||||||
Issuance of Series A Preferred Units, net of offering costs
|
—
|
|
|
1,158,313
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,158,313
|
|
|||||||
Bolt-on Acquisition (Note 2)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
478,460
|
|
|
478,460
|
|
|||||||
Balance at December 31, 2019
|
$
|
—
|
|
|
$
|
1,183,814
|
|
|
$
|
4,020,601
|
|
|
$
|
(2,822
|
)
|
|
$
|
—
|
|
|
$
|
457,169
|
|
|
$
|
5,658,762
|
|
(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.
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(Thousands)
|
||||||
Gathering assets (a)(b)
|
|
$
|
6,512,601
|
|
|
$
|
4,387,908
|
|
Accumulated depreciation
|
|
(478,172
|
)
|
|
(247,720
|
)
|
||
Net gathering assets
|
|
6,034,429
|
|
|
4,140,188
|
|
||
Transmission and storage assets
|
|
1,844,859
|
|
|
1,785,157
|
|
||
Accumulated depreciation
|
|
(326,140
|
)
|
|
(286,693
|
)
|
||
Net transmission and storage assets
|
|
1,518,719
|
|
|
1,498,464
|
|
||
Water services assets
|
|
215,039
|
|
|
194,465
|
|
||
Accumulated depreciation
|
|
(53,065
|
)
|
|
(26,489
|
)
|
||
Net water services assets
|
|
161,974
|
|
|
167,976
|
|
||
Net property, plant and equipment
|
|
$
|
7,715,122
|
|
|
$
|
5,806,628
|
|
(a)
|
Includes approximately $59.1 million for the year ended December 31, 2019 related to non-operating assets acquired from Equitrans Midstream in the Shared Assets Transaction (defined in Note 2) that primarily support EQM's gathering activities.
|
(b)
|
Includes approximately $1.2 billion for the year ended December 31, 2019 related to net property, plant and equipment acquired in the Bolt-on Acquisition that primarily supports EQM's gathering activities.
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(Thousands)
|
||||||
Intangible assets
|
$
|
934,200
|
|
|
$
|
623,200
|
|
Less: impairment of Hornet Midstream-related intangible assets (a)
|
(36,405
|
)
|
|
—
|
|
||
Less: accumulated amortization
|
(100,356
|
)
|
|
(47,087
|
)
|
||
Intangible assets, net
|
$
|
797,439
|
|
|
$
|
576,113
|
|
(a)
|
See Note 3 for disclosure regarding impairments of long-lived assets.
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(Thousands)
|
||||||
AROs at beginning of period
|
$
|
11,935
|
|
|
$
|
9,321
|
|
Liabilities incurred
|
—
|
|
|
231
|
|
||
Revisions to estimated liabilities (a)
|
(201
|
)
|
|
1,928
|
|
||
Accretion expense
|
567
|
|
|
455
|
|
||
AROs at end of period
|
$
|
12,301
|
|
|
$
|
11,935
|
|
(a)
|
Revisions to estimated liabilities reflect changes in retirement cost assumptions and to the estimated timing of liability settlement.
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Thousands)
|
||||||||||
Operating revenues
|
$
|
396,847
|
|
|
$
|
393,911
|
|
|
$
|
383,309
|
|
Operating expenses
|
$
|
210,861
|
|
|
$
|
140,832
|
|
|
$
|
143,614
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(Thousands)
|
||||||
Property, plant and equipment
|
$
|
1,955,519
|
|
|
$
|
1,900,411
|
|
Accumulated depreciation
|
(436,275
|
)
|
|
(317,988
|
)
|
||
Net property, plant and equipment
|
$
|
1,519,244
|
|
|
$
|
1,582,423
|
|
(in thousands)
|
|
Preliminary Purchase Price Allocation
(As initially reported)
|
|
Measurement Period Adjustments(a)
|
|
Purchase Price Allocation
(As adjusted)
|
||||||
Consideration given:
|
|
|
|
|
|
|
||||||
Cash consideration(b)
|
|
$
|
861,250
|
|
|
$
|
(11,404
|
)
|
|
$
|
849,846
|
|
Buyout of portion of Eureka Midstream Class B Units and incentive compensation
|
|
2,530
|
|
|
—
|
|
|
2,530
|
|
|||
Total consideration
|
|
863,780
|
|
|
(11,404
|
)
|
|
852,376
|
|
|||
|
|
|
|
|
|
|
||||||
Fair value of liabilities assumed:
|
|
|
|
|
|
|
||||||
Current liabilities
|
|
52,458
|
|
|
(9,857
|
)
|
|
42,601
|
|
|||
Long-term debt
|
|
300,825
|
|
|
—
|
|
|
300,825
|
|
|||
Other long-term liabilities
|
|
10,203
|
|
|
—
|
|
|
10,203
|
|
|||
Amount attributable to liabilities assumed
|
|
363,486
|
|
|
(9,857
|
)
|
|
353,629
|
|
|||
|
|
|
|
|
|
|
||||||
Fair value of assets acquired:
|
|
|
|
|
|
|
||||||
Cash
|
|
15,145
|
|
|
—
|
|
|
15,145
|
|
|||
Accounts receivable
|
|
16,817
|
|
|
—
|
|
|
16,817
|
|
|||
Inventory
|
|
12,991
|
|
|
(26
|
)
|
|
12,965
|
|
|||
Other current assets
|
|
882
|
|
|
—
|
|
|
882
|
|
|||
Net property, plant and equipment
|
|
1,222,284
|
|
|
(8,906
|
)
|
|
1,213,378
|
|
|||
Intangible assets (c)
|
|
317,000
|
|
|
(6,000
|
)
|
|
311,000
|
|
|||
Other assets
|
|
14,567
|
|
|
—
|
|
|
14,567
|
|
|||
Amount attributable to assets acquired
|
|
1,599,686
|
|
|
(14,932
|
)
|
|
1,584,754
|
|
|||
|
|
|
|
|
|
|
||||||
Noncontrolling interests
|
|
(486,062
|
)
|
|
7,602
|
|
|
(478,460
|
)
|
|||
|
|
|
|
|
|
|
||||||
Goodwill as of April 10, 2019
|
|
$
|
113,642
|
|
|
$
|
(13,931
|
)
|
|
$
|
99,711
|
|
Impairment of goodwill (d)
|
|
|
|
|
|
(99,711
|
)
|
|||||
Goodwill as of December 31, 2019
|
|
|
|
|
|
$
|
—
|
|
(a)
|
EQM recorded measurement period adjustments to its preliminary acquisition date fair values due to the refinement of its valuation models, assumptions and inputs. The measurement period adjustments were based upon information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the measurement of the amounts recognized at that date.
|
(b)
|
The cash consideration for the Bolt-on Acquisition was adjusted by approximately $11.4 million related to working capital adjustments and the release of all escrowed indemnification funds to EQM.
|
(c)
|
After considering the refinements to the valuation models, EQM estimated the fair value of the customer-related intangible assets acquired as part of the Bolt-on Acquisition to be $311.0 million. As a result, the fair value of the customer-related intangible assets was decreased by $6.0 million on September 30, 2019 with a corresponding increase to goodwill. In addition, the change to the provisional amount resulted in a decrease in amortization expense and accumulated amortization of approximately $0.4 million.
|
(d)
|
During the third quarter of 2019, EQM identified impairment indicators that suggested the fair value of its goodwill was more likely than not below its carrying amount. As such, EQM performed an interim goodwill impairment assessment, which resulted in EQM recognizing impairment to goodwill of approximately $261.3 million, of which $99.7 million was associated with its Eureka/Hornet reporting unit bringing the reporting unit's goodwill balance to zero. See Note 3 for further detail.
|
(in thousands)
|
|
As of December 31, 2019
|
||
Intangible assets
|
|
$
|
311,000
|
|
Less: impairment of Hornet Midstream-related intangible assets (a)
|
|
36,405
|
|
|
Less: accumulated amortization
|
|
11,711
|
|
|
Intangible assets, net
|
|
$
|
262,884
|
|
(a)
|
See Note 3 for disclosure regarding impairments of long-lived assets.
|
(in thousands)
|
|
April 10, 2019 through December 31, 2019
|
||
Operating revenues
|
|
$
|
97,123
|
|
Operating loss attributable to EQM
|
|
$
|
(94,551
|
)
|
Net loss attributable to noncontrolling interests
|
|
$
|
(21,291
|
)
|
Net loss attributable to EQM
|
|
$
|
(80,631
|
)
|
|
|
Years ended December 31,
|
||||||||||
(in thousands, except per unit data)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Pro forma operating revenues
|
|
$
|
1,661,822
|
|
|
$
|
1,616,821
|
|
|
$
|
987,735
|
|
Pro forma net income
|
|
$
|
190,234
|
|
|
$
|
709,067
|
|
|
$
|
626,854
|
|
Pro forma net (loss) income attributable to noncontrolling interests
|
|
$
|
(18,074
|
)
|
|
$
|
19,746
|
|
|
$
|
8,346
|
|
Pro forma net income attributable to EQM
|
|
$
|
208,308
|
|
|
$
|
689,321
|
|
|
$
|
618,508
|
|
Pro forma income per limited partner common unit (basic)
|
|
$
|
0.53
|
|
|
$
|
2.93
|
|
|
$
|
2.58
|
|
Pro forma income per limited partner common unit (diluted)
|
|
$
|
0.51
|
|
|
$
|
2.83
|
|
|
$
|
2.49
|
|
|
|
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 (defined in Note 12) (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 (g)
|
|
261,941
|
|
|
Goodwill as of December 31, 2018
|
|
1,123,813
|
|
|
Impairment of goodwill (g)
|
|
637,115
|
|
|
Goodwill as of December 31, 2019
|
|
$
|
486,698
|
|
(a)
|
Includes the estimated fair value attributable to noncontrolling interest in Strike Force of $166 million.
|
(b)
|
The fair value of current assets and current liabilities was assumed by EQT to approximate their carrying values.
|
(c)
|
The identifiable intangible assets for customer relationships were estimated by EQT 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 by EQT utilizing estimated replacement cost adjusted for a usage or obsolescence factor.
|
(e)
|
The estimated fair value of long-term liabilities was determined by EQT 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 acquisitions and ownership of the acquired gathering assets as of November 13, 2017.
|
(g)
|
See Note 3 for further detail.
|
|
Year Ended December 31, 2017
|
||
(in thousands)
|
|
||
Pro forma operating revenues
|
$
|
1,264,704
|
|
Pro forma net income
|
781,273
|
|
|
Pro forma net income attributable to noncontrolling interests
|
8,144
|
|
|
Pro forma net income attributable to EQM
|
773,129
|
|
3.
|
Impairments of Long-Lived Assets
|
|
RMP PA Gas Gathering
|
|
Rice Retained Midstream
|
|
Eureka/Hornet
|
|
Total
|
||||||||
|
(Thousands)
|
||||||||||||||
Goodwill as of January 1, 2018
|
$
|
1,346,918
|
|
|
$
|
37,954
|
|
|
$
|
—
|
|
|
$
|
1,384,872
|
|
Add: measurement period adjustments
|
—
|
|
|
882
|
|
|
—
|
|
|
882
|
|
||||
Less: impairment of goodwill
|
(261,941
|
)
|
|
—
|
|
|
—
|
|
|
(261,941
|
)
|
||||
Goodwill as of December 31, 2018
|
1,084,977
|
|
|
38,836
|
|
|
—
|
|
|
1,123,813
|
|
||||
Add: goodwill associated with Bolt-on Acquisition
|
—
|
|
|
—
|
|
|
99,711
|
|
|
99,711
|
|
||||
Less: impairment of goodwill
|
(598,279
|
)
|
|
(38,836
|
)
|
|
(99,711
|
)
|
|
(736,826
|
)
|
||||
Goodwill as of December 31, 2019
|
$
|
486,698
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
486,698
|
|
4.
|
Revenue from Contracts with Customers
|
|
|
Year Ended December 31, 2019
|
||||||||||||||
|
|
Gathering
|
|
Transmission
|
|
Water
|
|
Total
|
||||||||
|
|
(Thousands)
|
||||||||||||||
Firm reservation fee revenues
|
|
$
|
581,118
|
|
|
$
|
356,569
|
|
|
$
|
—
|
|
|
$
|
937,687
|
|
Volumetric-based fee revenues
|
|
578,813
|
|
|
33,951
|
|
|
—
|
|
|
612,764
|
|
||||
Water service revenues
|
|
—
|
|
|
—
|
|
|
79,791
|
|
|
79,791
|
|
||||
Total operating revenues
|
|
$
|
1,159,931
|
|
|
$
|
390,520
|
|
|
$
|
79,791
|
|
|
$
|
1,630,242
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
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
|
|
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
|
Total
|
||||||||||||||
|
(Thousands)
|
|||||||||||||||||||||||||||
Gathering firm reservation fees
|
|
$
|
517,406
|
|
|
$
|
590,056
|
|
|
$
|
592,324
|
|
|
$
|
590,342
|
|
|
$
|
552,598
|
|
|
$
|
1,576,827
|
|
|
$
|
4,419,553
|
|
Gathering revenues supported by MVCs
|
|
133,969
|
|
|
153,065
|
|
|
153,065
|
|
|
152,242
|
|
|
145,930
|
|
|
463,086
|
|
|
1,201,357
|
|
|||||||
Transmission firm reservation fees
|
|
354,363
|
|
|
375,020
|
|
|
370,273
|
|
|
332,404
|
|
|
273,257
|
|
|
2,489,864
|
|
|
4,195,181
|
|
|||||||
Water revenues supported by MVCs
|
|
35,536
|
|
|
2,000
|
|
|
2,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39,536
|
|
|||||||
Total
|
|
$
|
1,041,274
|
|
|
$
|
1,120,141
|
|
|
$
|
1,117,662
|
|
|
$
|
1,074,988
|
|
|
$
|
971,785
|
|
|
$
|
4,529,777
|
|
|
$
|
9,855,627
|
|
5.
|
Leases
|
|
Year Ended
December 31, 2019 |
||
|
(Thousands)
|
||
Operating lease cost
|
$
|
10,312
|
|
Short-term lease cost
|
4,560
|
|
|
Variable lease cost
|
166
|
|
|
Total lease cost
|
$
|
15,038
|
|
|
December 31, 2019
|
||
|
(Thousands)
|
||
2020
|
$
|
12,504
|
|
2021
|
10,249
|
|
|
2022
|
7,974
|
|
|
2023
|
5,607
|
|
|
2024
|
3,966
|
|
|
Thereafter
|
24,728
|
|
|
Total
|
65,028
|
|
|
Less: imputed interest
|
13,279
|
|
|
Present value of operating lease liability
|
$
|
51,749
|
|
|
Limited Partner Interests
|
|
|
|
|
|||||||||
|
Series A Preferred Units
|
|
Common Units
|
|
Class B Units
|
|
General Partner Units
|
|
Total
|
|||||
Balance at January 1, 2017
|
—
|
|
|
80,581,758
|
|
|
—
|
|
|
1,443,015
|
|
|
82,024,773
|
|
Balance at December 31, 2017 (a)
|
—
|
|
|
80,581,758
|
|
|
—
|
|
|
1,443,015
|
|
|
82,024,773
|
|
Common units issued (b)
|
—
|
|
|
10,821
|
|
|
—
|
|
|
—
|
|
|
10,821
|
|
Drop-Down Transaction consideration
|
—
|
|
|
5,889,282
|
|
|
—
|
|
|
—
|
|
|
5,889,282
|
|
Common units issued in the EQM-RMP Merger
|
—
|
|
|
33,975,777
|
|
|
—
|
|
|
—
|
|
|
33,975,777
|
|
Balance at December 31, 2018
|
—
|
|
|
120,457,638
|
|
|
—
|
|
|
1,443,015
|
|
|
121,900,653
|
|
Unit cancellation
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
EQM IDR Transaction (c)
|
—
|
|
|
80,000,000
|
|
|
7,000,000
|
|
|
(1,443,015
|
)
|
|
85,556,985
|
|
Issuance of Series A Preferred Units
|
24,605,291
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,605,291
|
|
Balance at December 31, 2019
|
24,605,291
|
|
|
200,457,630
|
|
|
7,000,000
|
|
|
—
|
|
|
232,062,921
|
|
(a)
|
There were no changes in common units or general partner units in 2017.
|
(b)
|
Units issued upon the resignation of a member of the Board of Directors of EQM's general partner.
|
(c)
|
In exchange for the cancellation of the EQM IDRs, EQM issued 87,000,000 EQM common units (the Exchange Consideration) to the former EQM general partner. At the effective time of the EQM IDR Merger, (i) the Exchange Consideration held by the former EQM general partner was canceled, (ii) 80,000,000 EQM common units and 7,000,000 Class B units were issued on a pro rata basis to certain affiliates of Equitrans Midstream, and (iii) 21,811,643 EQM common units held by EQGP were canceled and 21,811,643 EQM common units were issued pro rata to certain other affiliates of Equitrans Midstream.
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Thousands)
|
||||||||||
Revenues from customers:
|
|
|
|
|
|
|
|
||||
Gathering
|
$
|
1,159,931
|
|
|
$
|
997,070
|
|
|
$
|
509,967
|
|
Transmission
|
390,520
|
|
|
386,801
|
|
|
371,986
|
|
|||
Water
|
79,791
|
|
|
111,227
|
|
|
13,605
|
|
|||
Total operating revenues
|
$
|
1,630,242
|
|
|
$
|
1,495,098
|
|
|
$
|
895,558
|
|
Operating (loss) income:
|
|
|
|
|
|
|
|
||||
Gathering (a)
|
$
|
(88,850
|
)
|
|
$
|
423,407
|
|
|
$
|
369,093
|
|
Transmission
|
277,731
|
|
|
265,579
|
|
|
247,467
|
|
|||
Water
|
15,305
|
|
|
37,667
|
|
|
4,145
|
|
|||
Total operating income
|
$
|
204,186
|
|
|
$
|
726,653
|
|
|
$
|
620,705
|
|
|
|
|
|
|
|
||||||
Reconciliation of operating income to net income:
|
|
|
|
|
|
||||||
Equity income(b)
|
163,279
|
|
|
61,778
|
|
|
22,171
|
|
|||
Other income
|
4,601
|
|
|
5,011
|
|
|
4,439
|
|
|||
Net interest expense
|
209,984
|
|
|
122,094
|
|
|
36,955
|
|
|||
Net income
|
$
|
162,082
|
|
|
$
|
671,348
|
|
|
$
|
610,360
|
|
(a)
|
Impairments of long-lived assets of $854.3 million and $261.9 million for the years ended December 31, 2019 and 2018, respectively, were included in Gathering operating income. See Note 3 for further information.
|
(b)
|
Equity income is included in the Transmission segment.
|
|
As of December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Thousands)
|
||||||||||
Segment assets:
|
|
|
|
|
|
|
|
||||
Gathering
|
$
|
7,572,911
|
|
|
$
|
6,011,654
|
|
|
$
|
5,656,094
|
|
Transmission(a)
|
3,903,707
|
|
|
3,066,659
|
|
|
1,947,566
|
|
|||
Water
|
202,440
|
|
|
237,602
|
|
|
208,273
|
|
|||
Total operating segments
|
11,679,058
|
|
|
9,315,915
|
|
|
7,811,933
|
|
|||
Headquarters, including cash
|
135,961
|
|
|
140,206
|
|
|
186,902
|
|
|||
Total assets
|
$
|
11,815,019
|
|
|
$
|
9,456,121
|
|
|
$
|
7,998,835
|
|
(a)
|
The equity investment in the MVP Joint Venture is included in the Transmission segment.
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Thousands)
|
||||||||||
Depreciation:
|
|
|
|
|
|
|
|
||||
Gathering
|
$
|
144,310
|
|
|
$
|
98,678
|
|
|
$
|
44,957
|
|
Transmission
|
51,935
|
|
|
49,723
|
|
|
58,689
|
|
|||
Water
|
26,915
|
|
|
23,513
|
|
|
3,515
|
|
|||
Total
|
$
|
223,160
|
|
|
$
|
171,914
|
|
|
$
|
107,161
|
|
Expenditures for segment assets:
|
|
|
|
|
|
|
|
||||
Gathering(a)(b)
|
$
|
893,804
|
|
|
$
|
717,251
|
|
|
$
|
254,522
|
|
Transmission(c)
|
59,313
|
|
|
114,450
|
|
|
111,102
|
|
|||
Water
|
37,457
|
|
|
23,537
|
|
|
6,233
|
|
|||
Total (d)
|
$
|
990,574
|
|
|
$
|
855,238
|
|
|
$
|
371,857
|
|
(a)
|
Includes approximately $59.1 million for the year ended December 31, 2019 related to non-operating assets acquired from Equitrans Midstream in the Shared Assets Transaction that primarily support EQM's gathering activities.
|
(b)
|
Includes approximately $25.9 million of capital expenditures related to noncontrolling interests in Eureka Midstream for the year ended December 31, 2019.
|
(c)
|
Transmission capital expenditures do not include capital contributions made to the MVP Joint Venture for the MVP and MVP Southgate projects of approximately $774.6 million, $913.2 million and $159.6 million for the years ended December 31, 2019, 2018 and 2017, respectively.
|
(d)
|
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 $85.8 million, $108.9 million, $90.7 million and $26.7 million at December 31, 2019, 2018, 2017 and 2016, respectively. On November 13, 2017, as a result of the Rice Merger, EQM assumed $72.3 million of Rice Midstream Holdings accrued capital expenditures. On April 10, 2019, as a result of the Bolt-on Acquisition, EQM assumed $8.8 million of Eureka Midstream accrued capital expenditures.
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Thousands)
|
||||||||||
Reimbursements to EQT
|
|
|
|
|
|
|
|
||||
Operating and maintenance expense (a)
|
$
|
—
|
|
|
$
|
49,778
|
|
|
$
|
39,957
|
|
Selling, general and administrative expense (a)
|
$
|
—
|
|
|
$
|
81,725
|
|
|
$
|
67,424
|
|
|
|
|
|
|
|
||||||
Reimbursements to Equitrans Midstream
|
|
|
|
|
|
|
|
||||
Operating and maintenance expense (a)
|
$
|
52,713
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Selling, general and administrative expense (a)
|
$
|
89,187
|
|
|
$
|
16,335
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Reimbursements from EQT and Equitrans Midstream (b)
|
|
|
|
|
|
|
|
||||
Plugging and abandonment
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4
|
|
Bare steel replacement
|
$
|
711
|
|
|
$
|
3,866
|
|
|
$
|
15,704
|
|
(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. These amounts exclude the recast impact of 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 and Equitrans Midstream.
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Thousands)
|
||||||||||
Operating revenues (a)
|
$
|
1,122,626
|
|
|
$
|
1,111,289
|
|
|
$
|
665,939
|
|
Operating and maintenance expense (b)
|
52,713
|
|
|
49,778
|
|
|
40,204
|
|
|||
Selling, general and administrative expense (b)
|
89,187
|
|
|
98,060
|
|
|
72,592
|
|
|||
Separation and other transaction costs (c)
|
(1,404
|
)
|
|
7,761
|
|
|
—
|
|
|||
Equity income (d)
|
163,279
|
|
|
61,778
|
|
|
22,171
|
|
|||
Interest income on Preferred Interest (see Note 1)
|
6,324
|
|
|
6,578
|
|
|
6,818
|
|
|||
Principal payments received on Preferred Interest (see Note 1)
|
4,661
|
|
|
4,406
|
|
|
4,166
|
|
|||
Distributions to Equitrans Midstream (e)
|
542,260
|
|
|
—
|
|
|
—
|
|
|||
Distributions to the EQM General Partner (f)
|
—
|
|
|
361,575
|
|
|
235,167
|
|
|||
Capital contributions to the MVP Joint Venture (d)
|
774,593
|
|
|
913,195
|
|
|
159,550
|
|
|||
Capital contributions from Equitrans Midstream / EQT
|
711
|
|
|
3,866
|
|
|
15,463
|
|
|||
Net contributions from EQT
|
—
|
|
|
3,001
|
|
|
29,711
|
|
(a)
|
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 Drop-Down Transaction and the EQM-RMP Merger as these amounts do not represent reimbursements pursuant to the omnibus agreements.
|
(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)
|
Associated with EQM's ownership in the MVP Joint Venture. See Note 9 for further detail.
|
(e)
|
The distributions to Equitrans Midstream 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, 2019, total distributions to Equitrans Midstream included the cash distribution declared on January 15, 2020 related to the fourth quarter of 2019 of $1.16 per common unit.
|
(f)
|
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,
|
||||||
|
2019
|
|
2018
|
||||
|
(Thousands)
|
||||||
Accounts receivable – related party
|
$
|
175,153
|
|
|
$
|
174,767
|
|
Due to related party
|
39,009
|
|
|
78,465
|
|
||
Capital contribution payable to the MVP Joint Venture
|
45,150
|
|
|
169,202
|
|
||
Investment in unconsolidated entity
|
2,324,108
|
|
|
1,510,289
|
|
||
Preferred Interest in EES (see Note 1 and Note 7)
|
110,059
|
|
|
114,720
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(Thousands)
|
||||||
Current assets
|
$
|
102,638
|
|
|
$
|
615,926
|
|
Noncurrent assets
|
4,951,521
|
|
|
3,202,506
|
|
||
Total assets
|
$
|
5,054,159
|
|
|
$
|
3,818,432
|
|
|
|
|
|
||||
Current liabilities
|
$
|
223,645
|
|
|
$
|
606,366
|
|
Equity
|
4,830,514
|
|
|
3,212,066
|
|
||
Total liabilities and equity
|
$
|
5,054,159
|
|
|
$
|
3,818,432
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Thousands)
|
||||||||||
Environmental remediation
|
$
|
(2,416
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Other income
|
6,243
|
|
|
5,762
|
|
|
528
|
|
|||
AFUDC - equity
|
245,890
|
|
|
90,791
|
|
|
32,054
|
|
|||
Net interest income
|
105,382
|
|
|
38,911
|
|
|
16,146
|
|
|||
Net income
|
$
|
355,099
|
|
|
$
|
135,464
|
|
|
$
|
48,728
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
|
Principal
|
|
Carrying Value (a)
|
|
Fair
Value (b) |
|
Principal
|
|
Carrying Value (a)
|
|
Fair
Value (b) |
||||||||||||
|
|
(Thousands)
|
||||||||||||||||||||||
$3 Billion Facility
|
|
$
|
610,000
|
|
|
$
|
610,000
|
|
|
$
|
610,000
|
|
|
$
|
625,000
|
|
|
$
|
625,000
|
|
|
$
|
625,000
|
|
Eureka Credit Facility
|
|
292,500
|
|
|
292,500
|
|
|
292,500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
2019 EQM Term Loan
|
|
1,400,000
|
|
|
1,397,491
|
|
|
1,400,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
4.00% Senior Notes due 2024
|
|
500,000
|
|
|
496,476
|
|
|
486,905
|
|
|
500,000
|
|
|
495,708
|
|
|
479,950
|
|
||||||
4.125% Senior Notes due 2026
|
|
500,000
|
|
|
494,115
|
|
|
471,770
|
|
|
500,000
|
|
|
493,264
|
|
|
454,200
|
|
||||||
4.75% Senior Notes due 2023
|
|
1,100,000
|
|
|
1,091,988
|
|
|
1,104,961
|
|
|
1,100,000
|
|
|
1,089,742
|
|
|
1,099,890
|
|
||||||
5.50% Senior Notes due 2028
|
|
850,000
|
|
|
840,420
|
|
|
839,035
|
|
|
850,000
|
|
|
839,302
|
|
|
841,526
|
|
||||||
6.50% Senior Notes due 2048
|
|
550,000
|
|
|
539,009
|
|
|
518,678
|
|
|
550,000
|
|
|
538,623
|
|
|
549,566
|
|
||||||
Total debt
|
|
$
|
5,802,500
|
|
|
$
|
5,761,999
|
|
|
$
|
5,723,849
|
|
|
$
|
4,125,000
|
|
|
$
|
4,081,639
|
|
|
$
|
4,050,132
|
|
(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.
|
13.
|
Net Income per Limited Partner Unit
|
|
|
Years Ended
December 31, |
||||||||||
|
|
2019
|
|
2018(a)
|
|
2017
|
||||||
|
|
(Thousand)
|
||||||||||
Net income attributable to EQM
|
|
$
|
183,373
|
|
|
$
|
668,002
|
|
|
$
|
609,626
|
|
Less: Series A Preferred Units interest in net income
|
|
(73,981
|
)
|
|
—
|
|
|
—
|
|
|||
Less: pre-acquisition net income allocated to EQT
|
|
—
|
|
|
(164,242
|
)
|
|
(37,722
|
)
|
|||
Less: general partner interest in net income – general partner units
|
|
—
|
|
|
(6,104
|
)
|
|
(10,060
|
)
|
|||
Less: general partner interest in net income – IDRs
|
|
—
|
|
|
(255,927
|
)
|
|
(143,531
|
)
|
|||
Limited partner interest in net income
|
|
$
|
109,392
|
|
|
$
|
241,729
|
|
|
$
|
418,313
|
|
|
|
|
|
|
|
|
|
|
|
|||
Net income allocable to common units
|
|
$
|
109,392
|
|
|
$
|
241,729
|
|
|
$
|
418,313
|
|
Net income allocable to Class B units
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
||||||
Weighted average limited partner common units outstanding - basic
|
|
189,085
|
|
|
99,303
|
|
|
80,603
|
|
|||
Weighted average limited partner common units outstanding - diluted(b)
|
|
196,085
|
|
|
99,303
|
|
|
80,603
|
|
|||
|
|
|
|
|
|
|
||||||
Net income per limited partner common unit - basic
|
|
$
|
0.58
|
|
|
$
|
2.43
|
|
|
$
|
5.19
|
|
Net income per limited partner common unit - diluted
|
|
$
|
0.56
|
|
|
$
|
2.43
|
|
|
$
|
5.19
|
|
(a)
|
Net income attributable to the Drop-Down Transaction and the EQM-RMP Merger for the periods prior to May 1, 2018 and July 23, 2018, 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 EQM unitholders.
|
(b)
|
For the year ended December 31, 2019, 7,000,000 Class B units were included in the calculation of diluted weighted average limited partner units outstanding based upon the application of the if-converted method. The effect of the 24,605,291 Series A Preferred Units was anti-dilutive.
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(Thousands)
|
||||||
Regulatory assets:
|
|
|
|
|
|||
Deferred taxes (a)
|
$
|
11,387
|
|
|
$
|
12,232
|
|
Other recoverable costs (b)
|
4,550
|
|
|
4,312
|
|
||
Total regulatory assets
|
$
|
15,937
|
|
|
$
|
16,544
|
|
|
|
|
|
||||
Regulatory liabilities:
|
|
|
|
||||
Deferred taxes (a)
|
$
|
9,750
|
|
|
$
|
10,119
|
|
On-going post-retirement benefits other than pensions (c)
|
11,225
|
|
|
10,132
|
|
||
Other reimbursable costs
|
1,076
|
|
|
1,082
|
|
||
Total regulatory liabilities
|
$
|
22,051
|
|
|
$
|
21,333
|
|
(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 recoverable settlement charges associated with the termination of the EQT Corporation Retirement Plan for Employees (the EQT Retirement Plan), a defined benefit pension plan previously sponsored by EQT, effective December 31, 2014. In March 2016, the IRS issued a favorable determination letter for the termination of the EQT Retirement Plan. In the third quarter of 2016, EQM reimbursed EQT approximately $5.2 million for its proportionate share of such funding related to retirees of Equitrans. The settlement charge is recoverable in FERC approved rates and thus was recorded as a regulatory asset and is amortized for rate recovery purposes over a period of 16 years.
|
(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(c)
|
|
September 30(c)
|
|
December 31(c)
|
||||||||
|
|
(Thousands, except per unit amounts)
|
||||||||||||||
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating revenues
|
|
$
|
389,782
|
|
|
$
|
406,167
|
|
|
$
|
408,434
|
|
|
$
|
425,859
|
|
Operating income (loss)
|
|
268,014
|
|
|
167,447
|
|
|
(31,077
|
)
|
|
(200,198
|
)
|
||||
Net income (loss)
|
|
251,931
|
|
|
156,471
|
|
|
(40,215
|
)
|
|
(206,105
|
)
|
||||
Net income (loss) attributable to EQM
|
|
$
|
251,931
|
|
|
$
|
152,438
|
|
|
$
|
(10,518
|
)
|
|
$
|
(210,478
|
)
|
Net income (loss) per limited partner common unit: (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
|
$
|
1.63
|
|
|
$
|
0.65
|
|
|
$
|
(0.18
|
)
|
|
$
|
(1.18
|
)
|
Diluted
|
|
$
|
1.56
|
|
|
$
|
0.62
|
|
|
$
|
(0.18
|
)
|
|
$
|
(1.18
|
)
|
2018 (b)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
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: (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic and diluted
|
|
$
|
1.61
|
|
|
$
|
1.09
|
|
|
$
|
1.14
|
|
|
$
|
(0.89
|
)
|
(a)
|
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.
|
(b)
|
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.
|
(c)
|
See Note 3 for disclosure regarding impairments of long-lived assets.
|
Name
|
|
Age
|
|
Position with EQM Midstream Services, LLC
|
M.A. Bryson
|
|
73
|
|
Director (independent)
|
K.M. Burke
|
|
70
|
|
Director (independent)
|
D.M. Charletta
|
|
47
|
|
Director, President and Chief Operating Officer
|
R.J. Cooper
|
|
58
|
|
Director
|
T.F. Karam
|
|
61
|
|
Chairman and Chief Executive Officer
|
K.R. Oliver
|
|
62
|
|
Director, Senior Vice President and Chief Financial Officer
|
B.P. Pietrandrea
|
|
45
|
|
Vice President and Chief Accounting Officer
|
L.E. Washington
|
|
52
|
|
Director (independent)
|
▪
|
Thomas F. Karam, Chairman and Chief Executive Officer
|
▪
|
Kirk R. Oliver, Senior Vice President and Chief Financial Officer
|
▪
|
Diana M. Charletta, President and Chief Operating Officer
|
▪
|
Brian P. Pietrandrea, Vice President and Chief Accounting Officer
|
Name
|
Title
|
Base Salary
|
Thomas F. Karam
|
Chairman and Chief Executive Officer
|
$675,000
|
Kirk R. Oliver
|
Senior Vice President and Chief Financial Officer
|
$500,000
|
Diana M. Charletta
|
President and Chief Operating Officer
|
$450,000*
|
Brian P. Pietrandrea
|
Vice President and Chief Accounting Officer
|
$224,000*
|
*
|
The Equitrans Midstream Board increased Ms. Charletta’s annual base salary from $400,000 to $450,000 in July 2019 to reflect her additional responsibilities upon taking on the role as President in addition to continuing as Chief Operating Officer. Likewise, the Equitrans Midstream Board increased Mr. Pietrandrea’s annual base salary from $205,000 to $224,000 to reflect his additional responsibilities upon taking on the role as Vice President and Chief Accounting Officer.
|
Equitrans Midstream EBITDA
50% Weight
|
|||
Threshold
($ in billions)
|
Target
($ in billions)
|
Maximum
($ in billions)
|
2019 Results*
($ in billions)
|
$1.175
|
$1.263
|
$1.351
|
$1.271
|
50%
|
100%
|
200%
|
109%
|
*
|
As provided under the STIP, the 2019 Results Equitrans Midstream EBITDA calculation excludes: (i) EBITDA and expenses related to 2019 acquisitions; and (ii) non-recurring, non-operational gains, losses and impairments. See Exhibit 99.1 to this Form 10-K for a reconciliation of Equitrans Midstream EBITDA to net income (loss), the most directly comparable GAAP financial measure.
|
*
|
Controllable Costs is calculated as the sum of Equitrans Midstream’s Operating and maintenance expenses and Selling, general and administrative expenses. As provided under the STIP, the 2019 Results Controllable Costs excludes specified circumstances or events that occurred during the 2019 plan year, as described above.
|
HSE Metrics
(25% Weight)
|
||||
Rate
|
Threshold
|
Target
|
Maximum
|
2019 Results
|
Incidents with Serious Potential Rate (10%)
|
1.91
|
1.56
|
1.22
|
0.81
|
Adjusted Incidents with Serious Potential Rate (5%)
|
If Actual Rate ‘0’ - Matches Incidents with Serious Potential Incident Payout
|
0
|
||
Controllable Erosion and Sediment Rate (10%)
|
0.66
|
0.54
|
0.42
|
0.13
|
|
50%
|
100%
|
200%
|
200%
|
•
|
Incidents with Serious Potential (ISP) Rate: Measures events with precursors that can lead to serious injuries and fatalities.
|
•
|
Adjusted Incidents with Serious Potential Rate: ISP rate is adjusted by the rate of Observation with Serious Potential (OSP). An OSP is an observation of an activity with precursors that has the potential to become an ISP before the event occurs.
|
•
|
Controllable Erosion and Sediment Rate: Measures erosion and sediment incidents that are due to the fault of Equitrans Midstream, whether by design, construction or management.
|
Metric
|
What it Measures
|
What it Does
|
Equitrans Midstream EBITDA
|
Key business indicator used by management and Equitrans Midstream’s investors to evaluate overall Equitrans Midstream performance.
|
ü Rewards NEOs based on Equitrans Midstream’s yearly financial results.
|
Controllable Costs
|
Evaluates how well Equitrans Midstream keeps costs in check.
|
ü Focuses attention on expenses that can erode earnings and drives overall culture of cost control.
|
Health, Safety and Environmental
|
Sets stringent safety and environmental goals
|
ü Promotes a culture where safety is embedded into all aspects of Equitrans Midstream’s decision-making.
ü Incentivizes risk and harm reduction.
|
NEO
|
Threshold
|
Target
|
Maximum
|
2019 STIP Award Earned
|
Thomas F. Karam
|
$336,058
|
$672,115
|
$1,344,230
|
$1,035,057
|
Kirk R. Oliver
|
$225,001
|
$450,001
|
$900,002
|
$693,000
|
Diana M. Charletta
|
$208,381
|
$416,761
|
$833,522
|
$641,812
|
Brian P. Pietrandrea
|
$43,124
|
$86,248
|
$172,496
|
$165,400*
|
*
|
Includes $32,579 discretionary bonus award.
|
Enterprise Products Partners LP
Energy Transfer LP
Kinder Morgan Inc.
The Williams Companies Inc.
MPLX LP
ONEOK Inc.
Cheniere Energy Inc.
Plains All American Pipeline LP
Magellan Midstream Partners LP
Targa Resources Corp.
|
Andeavor Logistics LP
Western Gas Equity Partners LP
Enable Midstream Partners LP
Phillips 66 Partners LP
Buckeye Partners LP
DCP Midstream LP
Plains GP Holdings LP
Antero Midstream GP LP
Crestwood Equity Partners LP
EnLink Midstream LLC
|
NEO
|
2019 Time-Based RSAs Awarded
|
2019 PRSUs Awarded
|
Thomas F. Karam
|
80,919
|
121,379
|
Kirk R. Oliver
|
15,984
|
23,976
|
Diana M. Charletta
|
23,976
|
35,964
|
Brian P. Pietrandrea
|
2,398
|
3,596
|
*
|
2019 TSR Peer Group utilized
|
•
|
Michael A. Bryson
|
•
|
Kenneth M. Burke
|
•
|
Diana M. Charletta
|
•
|
Robert J. Cooper
|
•
|
Thomas F. Karam
|
•
|
Kirk R. Oliver
|
•
|
Lara E. Washington
|
(1)
|
Mr. Swisher retired from Equitrans Midstream on July 31, 2019.
|
||||||||
(2)
|
The amount in this column reflects the discretionary bonus award for Mr. Pietrandrea.
|
||||||||
(3)
|
The amounts for 2019 in this column reflect the aggregate grant date fair values determined in accordance with FASB ASC Topic 718 using the assumptions described in Note 10 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, 2019, filed with the SEC on February 27, 2020. With respect to stock awards granted in 2019, 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 200% 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
($)
|
||
T.F. Karam
|
1,824,326
|
|
3,648,652
|
|
K.R. Oliver
|
360,359
|
|
720,718
|
|
D.M. Charletta
|
540,539
|
|
1,081,078
|
|
B.P. Pietrandrea
|
54,048
|
|
108,096
|
|
P.D. Swisher
|
89,804
|
|
179,608
|
|
(4)
|
The amounts for 2019 in this column reflect the annual performance incentives earned by each named executive officer pursuant to the terms of the STIP with respect to performance during the year ended December 31, 2019. With respect to Mr. Swisher, the amount in this column reflects the pro-rated STIP payment he received in connection with his retirement in July 2019. These awards were paid to the named executive officers in cash in the first quarter of 2020. See "2019 Annual Incentives (STIP)" in the Compensation Discussion and Analysis above for further discussion of the STIP for the 2019 plan year.
|
||||||||
(5)
|
This column includes the dollar value of premiums paid by Equitrans Midstream for group life and accidental death and dismemberment insurance, Equitrans Midstream’s contributions to the 401(k) plan, perquisites, and in the case of Mr. Swisher, payments made in connection with his retirement in July 2019. For detailed information regarding the amounts Mr. Swisher actually received, see “Payments Upon Termination of Employment or a Change of Control” below. For 2019, these amounts were as follows:
|
Name
|
insurance Premiums
($)
|
401(k) Contributions
($)
|
Perquisites (see below) ($) |
Other
($)
|
Total
($)
|
|||||
T.F. Karam
|
1,782
|
|
25,200
|
|
18,677
|
|
—
|
|
45,659
|
|
K.R. Oliver
|
1,320
|
|
25,200
|
|
17,980
|
|
—
|
|
44,500
|
|
D.M. Charletta
|
1,191
|
|
25,200
|
|
17,980
|
|
—
|
|
44,371
|
|
B.P. Pietrandrea
|
594
|
|
18,932
|
|
—
|
|
—
|
|
19,526
|
|
P.D. Swisher
|
345
|
|
14,590
|
|
—
|
|
40,050
|
|
54,985
|
|
|
|
|
|
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
|
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)
|
($) (2)
|
(#)
|
(#) (3)
|
(#) (3)
|
(#) (4)
|
($)
|
|||||||||
T.F. Karam
|
STIP
|
—
|
|
—
|
|
336,058
|
672,115
|
1,344,230
|
—
|
—
|
—
|
—
|
—
|
|||||||
PSU
|
3/1/2019
|
|
2/5/2019
|
|
—
|
—
|
—
|
60,690
|
121,379
|
242,758
|
—
|
1,824,326
|
||||||||
RS
|
3/1/2019
|
|
2/5/2019
|
|
—
|
—
|
—
|
—
|
—
|
—
|
80,919
|
1,427,411
|
||||||||
K.R. Oliver
|
STIP
|
—
|
|
—
|
|
225,001
|
450,001
|
900,002
|
—
|
—
|
—
|
—
|
—
|
|||||||
PSU
|
3/1/2019
|
|
2/5/2019
|
|
—
|
—
|
—
|
11,988
|
23,976
|
47,952
|
—
|
360,359
|
||||||||
RS
|
3/1/2019
|
|
2/5/2019
|
|
—
|
—
|
—
|
—
|
—
|
—
|
15,984
|
281,958
|
||||||||
D.M. Charletta
|
STIP
|
—
|
—
|
|
208,381
|
416,761
|
833,522
|
—
|
—
|
—
|
—
|
—
|
||||||||
PSI
|
3/1/2019
|
|
2/5/2019
|
|
—
|
—
|
—
|
17,982
|
35,964
|
71,928
|
—
|
540,539
|
||||||||
RS
|
3/1/2019
|
|
2/5/2019
|
|
—
|
—
|
—
|
—
|
—
|
—
|
23,976
|
422,937
|
||||||||
B.P. Pietrandrea
|
STIP
|
—
|
—
|
|
43,124
|
86,248
|
172,496
|
—
|
—
|
—
|
—
|
—
|
||||||||
PSU
|
3/1/2019
|
|
2/5/2019
|
|
—
|
—
|
—
|
1,798
|
3,596
|
7,192
|
—
|
54,048
|
||||||||
RS
|
3/1/2019
|
|
2/5/2019
|
|
—
|
—
|
—
|
—
|
—
|
—
|
2,398
|
42,301
|
||||||||
P.D. Swisher
|
STIP
|
—
|
—
|
|
28,818
|
57,635
|
115,270
|
—
|
—
|
—
|
—
|
—
|
||||||||
PSU
|
3/1/2019
|
|
2/5/2019
|
|
—
|
—
|
—
|
2,988
|
5,975
|
11,950
|
—
|
89,804
|
||||||||
RS
|
3/1/2019
|
|
2/5/2019
|
|
—
|
—
|
—
|
—
|
—
|
—
|
3,983
|
70,260
|
(1)
|
Type of Award:
|
|||
|
STIP = Equitrans Midstream Corporation 2019 Short-Term Incentive Plan Award
PSU = 2019 Performance Share Unit Program Awards
RS = 2019 Restricted Share Awards
|
|||
(2)
|
These columns reflect the annual incentive award target and maximum amounts granted under the STIP. The payout amounts could range from no payment, to the percentage of actual base salary earned for 2019 identified as the target annual incentive award (target), to two times the target annual incentive award (maximum). For details regarding the performance metrics under the STIP, see “2019 Annual Incentives (STIP)” in the Compensation Discussion and Analysis above.
|
|||
(3)
|
These columns reflect the target and maximum number of units payable under the 2019 PSU Program. For details regarding the 2019 PSU Program and awards, see “Long-Term Incentive Program (LTIP)” in the Compensation Discussion and Analysis above. The awards vest on the payment date following December 31, 2021, subject to continued employment with Equitrans Midstream.
|
|||
(4)
|
This column reflects the number of time-based restricted shares granted to the named executive officers. For details regarding the terms of the restricted share awards, see “Long-Term Incentive Program (LTIP)” in the Compensation Discussion and Analysis above. Each grant mentioned in this column vests on January 1, 2022, subject to continued employment with Equitrans Midstream through the vesting date.
|
•
|
restrictions on competition for 24 months (12 months for Messrs. Pietrandrea and Swisher);
|
•
|
restrictions on customer solicitation for 24 months (12 months for Messrs. Pietrandrea and Swisher); and
|
•
|
restrictions on employee, consultant, vendor or independent contractor recruitment for 36 months (12 months for Messrs. Pietrandrea and 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
|
—
|
|
|
—
|
|
60,690
|
|
(j)
|
810,818
|
|
||
60,059
|
|
(a)*
|
654,641
|
|
—
|
|
|
—
|
|
|||
53,564
|
|
(a)
|
715,610
|
|
—
|
|
|
—
|
|
|||
80,919
|
|
(e)
|
1,081,078
|
|
—
|
|
|
—
|
|
|||
K. R. Oliver
|
—
|
|
|
—
|
|
11,988
|
|
(j)
|
160,160
|
|
||
8,809
|
|
(a)*
|
96,017
|
|
—
|
|
|
—
|
|
|||
7,859
|
|
(a)
|
104,999
|
|
—
|
|
|
—
|
|
|||
15,984
|
|
(e)
|
213,546
|
|
—
|
|
|
—
|
|
Compensation Feature
|
2019
|
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
($) |
|||||||||
M.A. Bryson
|
91,000
|
|
85,203
|
|
75,454
|
|
251,657
|
|
|||||
K.M. Burke
|
69,731
|
|
85,203
|
|
11,527
|
|
166,461
|
|
|||||
L.E. Washington
|
86,000
|
|
85,203
|
|
57,998
|
|
229,201
|
|
(1)
|
Includes annual cash retainer, meeting fees and committee chair fees related to services rendered during 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 2019. On January 1, 2019, the EQM General Partner granted 1,970 phantom units to each non-employee director. The grant date fair value is computed as the sum of the number of phantom units awarded on the grant date multiplied by the closing price of EQM’s common units on the business day prior to the grant date, which closing price was $43.25 on December 31, 2018.
|
(3)
|
This column reflects (i) accrued distributions on phantom units; (ii) annual premiums of $48.46 per director paid for life insurance and travel accident insurance policies ($24.23 for Mr. Burke) and (iii) the following matching gifts made to qualifying organizations under the Equitrans Midstream Foundation’s Matching Gifts Program: Mr. Bryson - $17,000 and Ms. Washington - $15,750.
|
•
|
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)
|
21,268
|
*
|
K.M. Burke
|
5,920
|
*
|
D.M. Charletta(5)
|
3,246
|
*
|
R.J. Cooper
|
878
|
*
|
T.F. Karam
|
—
|
—
|
K.R. Oliver
|
—
|
—
|
B.P. Pietrandrea (6)
|
1,178
|
—
|
P.D. Swisher (7)
|
1,790
|
*
|
L.E. Washington
|
13,227
|
*
|
All directors and executive officers as a group (9 individuals)
|
47,507
|
*
|
(1)
|
Unless otherwise indicated, the address for all beneficial owners in this table is c/o EQGP Services, LLC, 2200 Energy Drive, Canonsburg, Pennsylvania 15317, 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 also includes phantom units, including accrued distributions, to be settled in EQM common units, in the following amounts: Mr. Bryson - 17,093 units; Mr. Burke - 5,920 units; and Ms. Washington - 13,227 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)
|
EQM common units beneficially owned include 152 common units over which Mr. Pietrandrea has shared voting and investment authority.
|
(7)
|
Information regarding EQM common units beneficially owned by Mr. Swisher is based on information provided by Mr. Swisher as of January 2, 2020.
|
(1)
|
Unless otherwise indicated, the address for all beneficial owners in this table is c/o EQGP Services, LLC, 2200 Energy Drive, Canonsburg, Pennsylvania 15317, Attn: Corporate Secretary.
|
(2)
|
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 Equitrans Midstream common stock, and over which the directors have no voting or investment power prior to settlement, in the following amounts: Mr. Burke - 42,336 units and Mr. Karam -3,444 units.
|
(3)
|
This column reflects the number of Equitrans Midstream shares beneficially owned as a percentage of the sum of Equitrans Midstream’s outstanding shares at January 31, 2020, and all options exercisable within 60 days of January 31, 2020.
|
(4)
|
Shares beneficially owned include 8,226 shares owned by Ms. Charletta’s husband, of which 66 shares are held in Ms. Charletta’s husband’s 401(k) plan.
|
(5)
|
Shares beneficially owned includes 450,000 shares that are held in E.T. Associates, L.P. of which Mr. Karam shares voting and investment authority.
|
(6)
|
Shares beneficially owned includes 18,650 shares that are held in a trust of which Mr. Oliver is a co-trustee and in which he shares voting and investment authority.
|
(7)
|
Information regarding Equitrans Midstream shares beneficially owned by Mr. Swisher is based on information provided by Mr. Swisher as of January 2, 2020.
|
NAME OF BENEFICIAL
OWNER
|
|
EQM COMMON UNITS BENEFICIALLY OWNED
|
|
PERCENTAGE OF EQM UNITS BENEFICIALLY OWNED
|
||||
Equitrans Midstream Corporation(1)
|
|
117,245,455
|
|
|
|
58.5
|
|
%
|
2200 Energy Drive
|
|
|
|
|
|
|
||
Canonsburg, PA 15317
|
|
|
|
|
|
|
||
Tortoise Capital Advisors, L.L.C.(2)
|
|
11,608,884
|
|
|
|
5.8
|
|
%
|
5100 W 115th Place
|
|
|
|
|
|
|
||
Leawood, KS 66211
|
|
|
|
|
|
|
||
Invesco Ltd. (3)
|
|
10,203,752
|
|
|
|
5.1
|
|
%
|
1555 Peachtree Street NE, Suite 1800
|
|
|
|
|
||||
Atlanta, GA 30309
|
|
|
|
|
(1)
|
Equitrans Midstream does not directly own any common units. “As of January 31, 2020, Equitrans Gathering Holdings, EQM GP Corp and EMH, each a wholly-owned subsidiary of Equitrans Midstream, held 89,505,616, 89,536 and 27,650,303 EQM common units, respectively. Additionally, Equitrans Gathering Holdings, EQM GP Corp and EMH held 6,153,907, 6,155 and 839,938 Class B units, respectively. As of January 31, 2020, Equitrans Midstream owned, directly or indirectly, 117,245,455 EQM common units and 7,000,000 Class B units (collectively representing a 59.9% limited partner interest in EQM, excluding the Series A Preferred Units) and the entire non-economic general partner interest in EQM, while the public owned a 40.1% limited partner interest in EQM.”
|
(2)
|
Information provided by Tortoise Capital Advisors, L.L.C. on February 14, 2020 reporting that as of December 31, 2019 Tortoise Capital Advisors, L.L.C. has sole voting power and dispositive power over 625,324 EQM common units, shared voting power over 9,972,190 EQM common units and shared dispositive power over 10,983,560 EQM common units.
|
(3)
|
Information based on a SEC Schedule 13G filed on February 13, 2020 reporting that Invesco Ltd. has sole voting power over 10,203,752 EQM common units and sole dispositive power over 10,135,201 EQM common units.
|
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
|
|
251,519
|
|
|
|
N/A
|
|
|
|
1,496,962
|
|
(1)
|
Total
|
|
251,519
|
|
|
|
N/A
|
|
|
|
1,496,962
|
|
|
(1)
|
The Amended and Restated EQGP 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. Since EQM's IPO through the date of Separation, EQM has been reimbursed approximately $30.7 million for bare steel replacement capital expenditures by EQT. Amounts reimbursed are recorded as capital contributions when received.
|
•
|
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 EQM 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’ 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,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Thousands)
|
||||||||||
DESCRIPTION OF REVENUE
|
|
|
|
|
|
||||||
Gathering
|
$
|
833,223
|
|
|
$
|
798,104
|
|
|
$
|
450,374
|
|
Transmission
|
218,330
|
|
|
210,021
|
|
|
202,016
|
|
|||
Water Service
|
71,073
|
|
|
103,164
|
|
|
13,549
|
|
|||
Total
|
$
|
1,122,626
|
|
|
$
|
1,111,289
|
|
|
$
|
665,939
|
|
•
|
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.
|
(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.
|
•
|
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, 2019
|
||
|
|
Statements of Consolidated Cash Flows for each of the three years in the period ended December 31, 2019
|
||
|
|
Consolidated Balance Sheets as of December 31, 2019 and 2018
|
||
|
|
Statements of Consolidated Equity for each of the three years in the period ended December 31, 2019
|
||
|
|
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.
|
|
|
|
|
The financial statements of the MVP Joint Venture, Series A are included in this filing as Exhibit 99.2 pursuant to Rule 3-09 of Regulation S-X.
|
|
|
|
|
|
|
|
|
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.
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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.
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Incorporated herein by reference to Exhibit 2.1 to Form 8-K (#001-35574) filed on October 13, 2016.
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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.
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Incorporated herein by reference to Exhibit 2.1 to Form 8-K (#001-35574) filed on April 26, 2018.
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Section 1350 Certification of Principal Executive Officer and Principal Financial Officer.
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Filed herewith as Exhibit 32.
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Non-GAAP Financial Information.
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Filed herewith as Exhibit 99.1.
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Mountain Valley Pipeline, LLC (Series A) financial statements.
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Filed herewith as Exhibit 99.2.
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101
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Inline Interactive Data File.
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Filed herewith as Exhibit 101.
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104
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Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
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Filed herewith as Exhibit 104.
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EQM Midstream Partners, LP
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By: EQGP Services, LLC, its General Partner
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By:
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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
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February 27, 2020
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/s/ THOMAS F. KARAM
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Chief Executive Officer and Chairman
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February 27, 2020
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Thomas F. Karam
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(Principal Executive Officer)
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/s/ KIRK R. OLIVER
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Senior Vice President, Chief Financial Officer and Director
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February 27, 2020
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Kirk R. Oliver
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(Principal Financial Officer)
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/s/ BRIAN P. PIETRANDREA
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Vice President and Chief Accounting Officer
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February 27, 2020
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Brian P. Pietrandrea
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(Principal Accounting Officer)
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/s/ DIANA M. CHARLETTA
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Director
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February 27, 2020
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Diana M. Charletta
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/s/ KENNETH M. BURKE
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Director
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February 27, 2020
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Kenneth M. Burke
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/s/ MICHAEL A. BRYSON
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Director
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February 27, 2020
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Michael A. Bryson
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/s/ ROBERT J. COOPER
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Director
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February 27, 2020
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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 27, 2020
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Lara E. Washington
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•
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will become bound and will be deemed to have agreed to be bound by the terms and conditions of our Partnership Agreement;
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•
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represents that the transferee has the capacity, power and authority to enter into our Partnership Agreement; and
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•
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makes the consents, acknowledgements and waivers contained in our Partnership Agreement.
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•
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the designation, stated value, and liquidation preference of the preferred units and the number of preferred units to constitute the series;
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•
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the number of preferred units to be offered;
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•
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the public offering price at which the preferred units will be issued;
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•
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any sinking fund provisions of the preferred units;
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•
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the voting rights, if any, of the preferred units;
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•
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the distribution rights of the preferred units, if any;
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•
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whether the preferred units will be redeemable and, if so, the price and the terms and conditions on which the preferred units may be redeemed, including the time during which the preferred units may be redeemed and any accumulated distributions thereof, if any, that the holders of the preferred units will be entitled to receive upon the redemption thereof;
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•
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the terms and conditions, if any, on which the preferred units will be convertible into, or exchangeable for, the preferred units of any other class or series of units representing limited partner interests, including the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting the same; and
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•
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any additional designations, preferences, rights, powers, duties and restrictions of the preferred units.
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•
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less, the amount of cash reserves established by our general partner to:
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•
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provide for the proper conduct of our business (including reserves for our future capital expenditures, for anticipated future debt service requirements, for the payment of quarterly distributions with respect to the Series A Preferred Units and for refunds of collected rates reasonably likely to be refunded as a result of a settlement or hearing related to FERC rate proceedings) subsequent to that quarter;
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•
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comply with applicable law, any of our debt instruments or other agreements; or
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•
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provide funds for distributions to our unitholders for any one or more of the next four quarters;
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•
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plus, if our general partner so determines, all or any portion of the cash on hand on the date of determination of available cash for the quarter resulting from working capital borrowings made subsequent to the end of such quarter.
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•
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first, to the holders of Series A Preferred Units, pro rata, until the cumulative gain allocated to such Series A Preferred Units is equal to the sum of, in respect of each Series A Preferred Unit, (1) the Series A Distribution Amount in respect of such Series A Preferred Unit, (2) the difference between the initial capital account balance and the Series A Preferred Unit Purchase Price with respect to such Series A Preferred Unit and (3) the cumulative loss previously allocated in respect of such Series A Preferred Unit;
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•
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second, to our general partner until the cumulative gain allocated to our general partner is equal to the cumulative loss previously allocated thereto; and
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•
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thereafter, to all unitholders (other than holders of Series A Preferred Units), pro rata.
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•
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first, to our unitholders (other than holders of Series A Preferred Units) in proportion to the positive balances in their capital accounts, until the capital accounts of such unitholders have been reduced to zero;
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•
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second, to holders of Series A Preferred Units, pro rata, until capital accounts of such holders of Series A Preferred Units have been reduced to zero; and
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•
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thereafter, 100% to our general partner.
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•
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to remove or replace our general partner;
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•
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to approve some amendments to our Partnership Agreement; or
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•
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to take other action under our Partnership Agreement;
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•
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enlarge the obligations of any limited partner without its consent, unless such is deemed to have occurred as a result of an amendment approved by at least a majority of the type or class of limited partner interests so affected; or
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•
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enlarge the obligations of, restrict in any way any action by or rights of, or reduce in any way the amounts distributable, reimbursable or otherwise payable by us to our general partner or any of its affiliates without its consent, which consent may be given or withheld at its option.
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•
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a change in our name, the location of our principal office, our registered agent or our registered office;
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•
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the admission, substitution, withdrawal or removal of partners in accordance with our Partnership Agreement;
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•
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a change that our general partner determines to be necessary or appropriate to qualify or continue to qualify us as a limited partnership or a partnership in which the limited partners have limited liability under the laws of any state or to ensure that neither we nor any of our subsidiaries will be treated as an association taxable as a corporation or otherwise taxed as an entity for federal income tax purposes;
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•
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any amendment that is necessary, in the opinion of our counsel, to prevent us or our general partner or its directors, officers, agents or trustees from, in any manner, being subjected to the provisions of the Investment Company Act of 1940, the Investment Advisors Act of 1940, or “plan asset” regulations adopted under the Employee Retirement Income Security Act of 1974, or ERISA, whether or not substantially similar to plan asset regulations currently applied or proposed by the United States Department of Labor;
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•
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any amendment that our general partner determines to be necessary or appropriate for the authorization or issuance of additional partnership interests;
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•
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any amendment expressly permitted in our Partnership Agreement to be made by our general partner acting alone;
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•
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any amendment effected, necessitated or contemplated by a merger agreement that has been approved under the terms of our Partnership Agreement;
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•
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any amendment that our general partner determines to be necessary or appropriate to reflect and account for the formation by us of, or our investment in, any corporation, partnership or other entity, in connection with our conduct of activities permitted by our Partnership Agreement;
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•
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a change in our fiscal year or taxable year and any other changes that our general partner determines to be necessary or appropriate as a result of such change;
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•
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conversions into, mergers with or conveyances to another limited liability entity that is newly formed and has no assets, liabilities or operations at the time of the conversion, merger or conveyance other than those it receives by way of the conversion, merger or conveyance; or
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•
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any other amendments substantially similar to any of the matters described in the clauses above.
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•
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does not adversely affect in any material respect the limited partners considered as a whole or any particular class of partnership interests as compared to other classes of partnership interests;
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•
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is necessary or appropriate to satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any federal or state agency or judicial authority or contained in any federal or state statute;
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•
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is necessary or appropriate to facilitate the trading of units or to comply with any rule, regulation, guideline or requirement of any securities exchange on which our units are or will be listed or admitted to trading;
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•
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is necessary or appropriate for any action taken by our general partner relating to splits or combinations of units under the provisions of our Partnership Agreement; or
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•
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is required to effect the intent of the provisions of our Partnership Agreement or is otherwise contemplated by our Partnership Agreement.
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•
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the election of our general partner to dissolve us, if approved by the holders of units representing a unit majority;
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•
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there being no limited partners, unless we are continued without dissolution in accordance with applicable Delaware law;
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•
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the entry of a decree of judicial dissolution of our partnership; or
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•
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the withdrawal or removal of our general partner or any other event that results in its ceasing to be our general partner, other than by reason of a transfer of its general partner interest in accordance with our Partnership Agreement or withdrawal or removal followed by approval and admission of a successor.
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•
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the action would not result in the loss of limited liability of any limited partner; and
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•
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neither our partnership nor any of our subsidiaries would be treated as an association taxable as a corporation or otherwise be taxable as an entity for federal income tax purposes upon the exercise of that right to continue.
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•
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an affiliate of our general partner (other than an individual); or
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•
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another entity as part of the merger or consolidation of our general partner with or into such entity or the transfer by our general partner of all or substantially all of its assets to such entity;
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•
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the highest cash price paid by either of our general partner or any of its affiliates for any limited partner interests of the class purchased within the 90 days preceding the date on which our general partner first mails notice of its election to purchase those limited partner interests; and
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•
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the current market price calculated in accordance with our Partnership Agreement as of the date three business days before the date the notice is mailed.
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•
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whose, or whose owners', U.S. federal income tax status (or lack of proof of U.S. federal income tax status) does not have or is not reasonably likely to have, as determined by our general partner, a material adverse effect on the rates that can be charged to customers with respect to assets that are subject to regulation by the FERC; or
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•
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as to whom our general partner cannot make the determination above, if our general partner determines that it is in our best interest to permit such individual or entity to own interests in us.
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1.
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Agreement (CHECK ONE)
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2.
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Service under this Agreement is provided pursuant to Subpart B or Subpart G of Part 284, Title 18, of the Code of Federal Regulations. Service under this Agreement is in all respects subject to and governed by the applicable Rate Schedule and the General Terms and Conditions of the Equitrans FERC Gas Tariff (“Tariff”) as they may be modified from time to time, and such are incorporated by reference. In the event that language of this Agreement or any Exhibit conflicts with Equitrans’ Tariff, the language of the Tariff will control.
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3.
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Equitrans shall have the unilateral right to file with the Commission or other appropriate regulatory authority, in accordance with Section 4 of the Natural Gas Act, changes in Equitrans’ Tariff, including both the level and design of rates, charges, Retainage Factors and services, and the General Terms and Conditions.
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4.
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Customer’s Maximum Daily Quantity (“MDQ”) of natural gas transported under this Agreement shall be the MDQ stated in Exhibit A to this Agreement. If service under this Agreement is associated with a firm storage agreement, Customer’s Base MDQ and Winter MDQ are stated in Alternative Exhibit A.
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5.
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The effective date, term and associated notice and renewal provisions of this Agreement are stated in Exhibit A to this Agreement.
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6.
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The Receipt and Delivery Points are stated in Exhibit A to this Agreement.
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7.
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Customer shall pay Equitrans the maximum applicable rate (including all other applicable charges and Retainage Factors authorized pursuant to Rate Schedule FTS and the Tariff) for services rendered under this Agreement, unless Customer and Equitrans execute Optional Exhibit B (Discounted Rate Agreement) or Optional Exhibit C (Negotiated Rate Agreement).
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8.
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Exhibits are incorporated by reference into this Agreement upon their execution. Customer and Equitrans may amend any attached Exhibit by mutual agreement, which amendments shall be reflected in a revised Exhibit, and shall be incorporated by reference as part of this Agreement.
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CUSTOMER:
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EQUITRANS, L.P.:
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By /s/ Paul Kress 1/8/2016 (Date)
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By /s/ David Gray 1/8/2016 (Date)
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Title Vice President
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Title Senior Vice President
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Base MDQ (Dth)
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Winter MDQ (Dth)
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Effective Date
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650,000
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650,000
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1/9/2020
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Primary Receipt Point(s)**
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Base
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Winter
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Effective
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(Meter No. and/or Meter Name)
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MDQ Allocation
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MDQ Allocation
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Date
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24605 - Mobley
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310,000 Dth
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310,000 Dth
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1/9/2020
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M5259543 - McIntosh
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200,000 Dth
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200,000 Dth
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1/9/2020
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M5237075 - Taurus
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70,000 Dth
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70,000 Dth
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1/9/2020
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17172 - Hopewell Ridge
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30,000 Dth
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30,000 Dth
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1/9/2020
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24490 - Pluto
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40,000 Dth
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40,000 Dth
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1/9/2020
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Primary Delivery Point(s)
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Base
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Winter
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Effective
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(Meter No. and/or Meter Name)
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MDQ Allocation
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MDQ Allocation
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Date
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60062D - REX Isaly
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500,000 Dth
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500,000 Dth
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1/9/2020
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70007D - Rover Traveler
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150,000 Dth
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150,000 Dth
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1/9/2020
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CUSTOMER:
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EQUITRANS, L.P.:
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By /s/ Nathaniel MacAdams 1/8/2020 (Date)
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By /s/ Andrew L. Murphy 1/8/2020 (Date)
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Title VP Structured Products
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Title Vice President
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CUSTOMER:
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EQUITRANS, L.P.:
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By /s/ Nathaniel MacAdams 1/8/2020 (Date)
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By /s/ Andrew L. Murphy 1/8/2020 (Date)
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Title VP Structured Products___________
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Title Vice President__________________
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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 Transaction Sub GP, LLC
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Delaware
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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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EQGP Holdings, LP
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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 Midstream Services, 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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Eureka Land, LLC
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Delaware
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Eureka Midstream Holdings, LLC
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Delaware
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Eureka Midstream, LLC
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Delaware
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Eureka Services Intermediate, LLC
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Delaware
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Eureka Services, LLC
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Delaware
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Hornet Midstream Holdings, LLC
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Delaware
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Hornet Midstream Pipeline, 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-8 No. 333-182460) of EQM Midstream Partners, LP pertaining to the Amended and Restated EQGP Services, LLC 2012 Long-Term Incentive Plan, and
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•
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Registration Statement (Form S-3 No. 333-234521) of EQM Midstream Partners, LP pertaining to the registration of Common Units Representing Limited Partner Interests, Preferred Units Representing Limited Partner Interests and Debt Securities;
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•
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Registration Statement (Form S-8 No. 333-182460) of EQM Midstream Partners, LP pertaining to the Amended and Restated EQGP Services, LLC 2012 Long-Term Incentive Plan, and
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•
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Registration Statement (Form S-3 No. 333-234521) of EQM Midstream Partners, LP pertaining to the registration of Common Units Representing Limited Partner Interests, Preferred Units Representing Limited Partner Interests and Debt Securities;
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Date:
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February 27, 2020
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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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Chief Executive Officer, EQGP Services, LLC, the registrant’s General Partner
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Date:
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February 27, 2020
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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, EQGP Services, LLC, the registrant’s General Partner
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/s/ THOMAS F. KARAM
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February 27, 2020
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Thomas F. Karam
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Chief Executive Officer, EQGP Services, LLC, EQM’s General Partner
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/s/ KIRK R. OLIVER
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February 27, 2020
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Kirk R. Oliver
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Senior Vice President and Chief Financial Officer, EQGP Services, LLC, EQM’s General Partner
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•
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Equitrans Midstream’s operating performance as compared to other publicly traded corporations in the midstream energy industry without regard to historical cost basis or financing methods;
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•
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The ability of Equitrans Midstream’s assets to generate sufficient cash flow to pay dividends to Equitrans Midstream shareholders;
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•
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Equitrans Midstream’s ability to incur and service debt and fund capital expenditures; and
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•
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The viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.
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Equitrans Midstream EBITDA ($ in thousands)
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As of
December 31, 2019
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||
Net Loss
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$
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(64,959
|
)
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Add:
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|
||
Income tax expense
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50,704
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|
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Net interest expense
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256,195
|
|
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Depreciation
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227,364
|
|
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Amortization of intangible assets
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53,258
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|
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Impairments of long-lived assets
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969,258
|
|
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Separation and other transaction costs
|
1,257
|
|
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Less:
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|
||
Equity income
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(163,279
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)
|
|
Other income
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(2,661
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)
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EBITDA attributable to the Bolt-on Acquisition(a)(b)
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(56,119
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)
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Equitrans Midstream EBITDA
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$
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1,271,018
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(a)
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On March 13, 2019, EQM entered into a Purchase and Sale Agreement with North Haven Infrastructure Partners II Buffalo Holdings, LLC, an affiliate of Morgan Stanley Infrastructure Partners, pursuant to which EQM acquired from NHIP a 60% Class A interest in Eureka Midstream Holdings, LLC and a 100% interest in Hornet Midstream Holdings, LLC (collectively, the Bolt-on Acquisition).
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(b)
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EBITDA attributable to the Bolt-on Acquisition was excluded from Equitrans Midstream EBITDA in accordance with the 2019 STIP calculation. EBITDA attributable to the Bolt-on Acquisition was calculated as net loss of $101.9 million plus net interest expense of $7.4 million, plus depreciation of $19.7 million, plus amortization of intangible assets of $11.7 million, plus impairments of long-lived assets of $136.1 million and less transaction costs of $16.9 million.
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($ in thousands)
|
2019
|
|
2018
|
||||||
|
|
|
|
||||||
ASSETS
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|
|
|
||||||
Current assets:
|
|
|
|
||||||
Cash and cash equivalents
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$
|
89,819
|
|
|
$
|
301,714
|
|
||
Capital contributions due from members
|
12,749
|
|
|
314,203
|
|
||||
Other current assets
|
70
|
|
|
9
|
|
||||
Total current assets
|
102,638
|
|
|
615,926
|
|
||||
|
|
|
|
||||||
Property, plant and equipment:
|
|
|
|
||||||
Construction work in process
|
4,941,598
|
|
|
3,185,957
|
|
||||
|
|
|
|
||||||
Other assets
|
9,923
|
|
|
16,549
|
|
||||
|
|
|
|
||||||
Total assets
|
$
|
5,054,159
|
|
|
$
|
3,818,432
|
|
||
|
|
|
|
||||||
LIABILITIES AND MEMBERS’ EQUITY
|
|
|
|
||||||
|
|
|
|
||||||
Current liabilities:
|
|
|
|
||||||
Accounts payable
|
$
|
222,326
|
|
|
$
|
605,644
|
|
||
Due to related parties
|
1,319
|
|
|
722
|
|
||||
Total current liabilities
|
223,645
|
|
|
606,366
|
|
||||
|
|
|
|
||||||
Members’ equity
|
4,830,514
|
|
|
3,212,066
|
|
||||
|
|
|
|
||||||
Total liabilities and members’ equity
|
$
|
5,054,159
|
|
|
$
|
3,818,432
|
|
($ in thousands)
|
2019
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
|
||||||||
Environmental expense
|
$
|
2,416
|
|
|
$
|
—
|
|
|
$
|
—
|
|
||
Allowance for equity funds used during construction
|
245,890
|
|
|
90,791
|
|
|
32,054
|
|
|||||
|
|
|
|
|
|
||||||||
Interest income:
|
|
|
|
|
|
||||||||
Allowance for borrowed funds used during construction
|
105,382
|
|
|
38,911
|
|
|
16,146
|
|
|||||
Other interest
|
6,243
|
|
|
5,762
|
|
|
528
|
|
|||||
Total interest income
|
111,625
|
|
|
44,673
|
|
|
16,674
|
|
|||||
|
|
|
|
|
|
||||||||
Net income
|
$
|
355,099
|
|
|
$
|
135,464
|
|
|
$
|
48,728
|
|
($ in thousands)
|
MVP Holdco, LLC
|
|
US Marcellus Gas Infrastructure, LLC
|
|
Con Edison Gas Pipeline and Storage, LLC
|
|
WGL Midstream, Inc.
|
|
RGC Midstream, LLC
|
|
Total
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at January 1, 2017
|
$
|
185,072
|
|
|
$
|
125,961
|
|
|
$
|
50,028
|
|
|
$
|
40,536
|
|
|
$
|
4,033
|
|
|
$
|
405,630
|
|
Capital contributions and changes in ownership interest(a)
|
253,813
|
|
|
172,927
|
|
|
69,729
|
|
|
55,783
|
|
|
5,578
|
|
|
557,830
|
|
||||||
Net income
|
22,171
|
|
|
15,106
|
|
|
6,091
|
|
|
4,873
|
|
|
487
|
|
|
48,728
|
|
||||||
Balance at December 31, 2017
|
$
|
461,056
|
|
|
$
|
313,994
|
|
|
$
|
125,848
|
|
|
$
|
101,192
|
|
|
$
|
10,098
|
|
|
$
|
1,012,188
|
|
Capital contributions and changes in ownership interest(a)
|
939,308
|
|
|
639,969
|
|
|
258,052
|
|
|
206,442
|
|
|
20,643
|
|
|
2,064,414
|
|
||||||
Net income
|
61,636
|
|
|
41,994
|
|
|
16,933
|
|
|
13,546
|
|
|
1,355
|
|
|
135,464
|
|
||||||
Balance at December 31, 2018
|
$
|
1,462,000
|
|
|
$
|
995,957
|
|
|
$
|
400,833
|
|
|
$
|
321,180
|
|
|
$
|
32,096
|
|
|
$
|
3,212,066
|
|
Capital contributions and changes in ownership interest(a)
|
610,257
|
|
|
415,779
|
|
|
155,214
|
|
|
132,740
|
|
|
13,413
|
|
|
1,327,403
|
|
||||||
Less: Capital contributions due from members(b)
|
(33,845
|
)
|
|
(23,060
|
)
|
|
—
|
|
|
(6,405
|
)
|
|
(744
|
)
|
|
(64,054
|
)
|
||||||
Net income
|
161,576
|
|
|
110,085
|
|
|
44,377
|
|
|
35,510
|
|
|
3,551
|
|
|
355,099
|
|
||||||
Balance at December 31, 2019
|
$
|
2,199,988
|
|
|
$
|
1,498,761
|
|
|
$
|
600,424
|
|
|
$
|
483,025
|
|
|
$
|
48,316
|
|
|
$
|
4,830,514
|
|
(a)
|
Includes capital contributions due from members for a total amount of $76,803, $314,203 and $232,382 as of December 31, 2019, 2018 and 2017, respectively. As of the date of issuance, contributions due from members totaling $12,749 have been paid.
|
(b)
|
Includes capital contributions due from members as of December 31, 2019 that were unpaid as of the date of issuance.
|
($ in thousands)
|
2019
|
|
2018
|
|
2017
|
|||||||
|
|
|
|
|
|
|||||||
Cash flows from operating activities:
|
|
|
|
|
|
|||||||
Net income
|
$
|
355,099
|
|
|
$
|
135,464
|
|
|
$
|
48,728
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|||||||
Allowance for funds used during construction
|
(351,272)
|
|
|
(129,702)
|
|
|
(48,200)
|
|
||||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|||||||
Other assets
|
(61)
|
|
|
(8)
|
|
|
(416)
|
|
||||
Net cash provided by operating activities
|
3,766
|
|
|
5,754
|
|
|
112
|
|
||||
|
|
|
|
|
|
|||||||
Cash flows from investing activities:
|
|
|
|
|
|
|||||||
Capital expenditures
|
(1,780,466)
|
|
|
(1,784,521)
|
|
|
(281,552)
|
|
||||
Net cash used in investing activities
|
(1,780,466)
|
|
|
(1,784,521)
|
|
|
(281,552)
|
|
||||
|
|
|
|
|
|
|||||||
Cash flows from financing activities:
|
|
|
|
|
|
|||||||
Capital contributions from members
|
1,564,805
|
|
|
1,982,592
|
|
|
350,658
|
|
||||
Net cash provided by financing activities
|
1,564,805
|
|
|
1,982,592
|
|
|
350,658
|
|
||||
|
|
|
|
|
|
|||||||
Net change in cash and cash equivalents
|
(211,895)
|
|
|
203,825
|
|
|
69,218
|
|
||||
Cash and cash equivalents at beginning of year
|
301,714
|
|
|
97,889
|
|
|
28,671
|
|
||||
Cash and cash equivalents at end of year
|
$
|
89,819
|
|
|
$
|
301,714
|
|
|
$
|
97,889
|
|