The new agreement provides EQT with gathering and compression fee relief, effective upon the Mountain Valley Pipeline’s in-service date, which is expected to be Jan. 1, 2021. As part of the agreement, EQT increased its minimum volume commitments with EQM Midstream Partners LP, over 100,000 additional acres in West Virginia, and extended its contractual obligations with EQM to 2035. EQM also agreed to defer approximately $250 million in current credit assurance posting requirements.
These transactions will result in approximately $535 million in total fee relief over a three-year period starting in 2021, substantially lowering the profile of EQT’s gathering and compression fee structure.
The extended contract duration provides EQT visibility into its long-term gathering fee structure, which is expected to decrease by approximately 35 percent for the period of 2024 through 2035.
EQT CEO Toby Rice stated, “I am excited to announce that we have executed a mutually beneficial gas gathering agreement with EQM, which significantly improves our EBITDA and leverage outlook for 2021 and beyond. This agreement will enable EQT to optimize the development of our long-lived core Marcellus asset in the most capital-efficient manner, driving value accretion for EQT and its stakeholders. This agreement is just one of many strategic steps we are taking to create a long-term, durable and sustainable business model.”