EQT board approves plan to spin-off midstream business

US-based petroleum and natural gas exploration company EQT is set to separate its upstream and midstream businesses after receiving approval from its board of directors.

The move is aimed at creating a standalone publicly traded company (NewCo) that will focus on midstream operations.

The newly formed Appalachian-based energy companies will continue to operate from Pittsburgh, Pennsylvania.

As per the arrangement, EQT shareholders will continue to own their shares of EQT stock and receive a pro-rata share of the new independent midstream company.

EQT lead independent director James Rohr said: “The decision to build our midstream business in parallel with upstream growth has created one of the strongest midstream companies in the Appalachian Basin.

“We have taken many steps to highlight the value of our midstream assets through a series of transactions, including the initial public offering of EQT Midstream Partners (EQM), midstream asset dropdowns to EQM, and the initial public offering of EQT GP Holdings (EQGP).”

According to the company, the benefits offered by the formation of the new public company to the standalone entities include visibility to attract an investor base suited to each business, as well as dedicated management and boards focused on distinct strategic visions.

In addition, the company will be able to allocate capital more efficiently and expand customer base expansion.

NewCo’s acreage position includes 246,000 acres in core Marcellus and 166,000 acres in core Ohio Utica.

In November last year, EQT completed the $6.7bn acquisition of all outstanding shares of Rice Energy.

Prior to the separation move, the company will pursue a merger of EQM and Rice Midstream Partners.

The spin-off is anticipated to be completed by the end of this year’s third quarter.