(By Balaseshan) EQT Corp. (NYSE: EQT), an integrated energy company, said it has agreed to sell its natural gas distribution business, Equitable Gas Co. LLC, to Peoples Natural Gas.
As part of the transaction, EQT will receive cash proceeds of $720 million, subject to certain purchase price adjustments, and select midstream assets and commercial arrangements, which are expected to generate at least $40 million in EBITDA per year.
Concurrent with this announcement, EQT will also lower its annual dividend, effective January 2013. The new dividend rate of $0.12 per share reflects the blend of EQT's two remaining core businesses – a dividend-supporting midstream business, and a capital-intensive, rapidly growing production business.
As part of the transaction, EQT will receive about 200 miles of regulated transmission pipelines, as well as four storage pools that have a total of 15.1 Bcf working gas capacity.
These assets are strategically located across multiple counties in Pennsylvania and connect to EQT's existing transmission assets, which will increase the company's transportation and storage capabilities.
Peoples Gas has also agreed to enter long-term contracts for gas transmission, supply, and storage services with EQT. These agreements will secure supply of local, Marcellus gas of about 35 Bcf per year to Peoples.
Equitable Gas provides natural gas distribution services to approximately 275,000 customers in Pennsylvania, West Virginia, and Kentucky; and owns approximately 4,000 miles of pipeline.
EQT expects to receive the required approvals by the end of 2013. This transaction will not impact EQT's previously announced 2013 capital program.
EQT closed Wednesday's regular session down 2.11% at $57.01. The stock has been trading between $43.69 and $62.74 for the past 52 weeks.