Equitrans Midstream, which owns the largest single stake in the Mountain Valley Pipeline joint venture, announced Monday it will reunite with its former owner, Pittsburgh-based EQT.
The merger will create a firm valued at more than $35 billion that a news release billed as “America’s only large-scale, vertically integrated natural gas company prepared to compete on the global stage.” The deal is expected to close during the fourth quarter.
The announcement comes as Equitrans looks to complete the 303-mile natural gas Mountain Valley Pipeline from West Virginia into southern Virginia by the end of next quarter. First announced in 2014, the pipeline has been delayed by legal and permitting battles and its anticipated final price tag has more than doubled to upwards of $7.63 billion.
“Combining with EQT creates a premier vertically integrated natural gas business that is a game changer for the natural gas industry and Appalachian Basin,” Equitrans Midstream executive chairman Thomas Karam said in the release.
Canonsburg, Pennsylvania-based Equitrans Midstream spun off from EQT in 2018 after an activist investor push that argued separating the two would better suit each part of the business, with EQT focusing on natural gas drilling and Equitrans on gas transportation, according to the Pittsburgh Post-Gazette.
EQT (NYSE:EQT) will acquire Equitrans (NYSE:ETRN) in an all-stock transaction, with each share of Equitrans common stock exchanged for 0.3504 shares of EQT common stock.
That values Equitrans Midstream stock at $12.50 per share, or a 12% premium from its Friday closing price. It gives Equitrans a market capitalization of approximately $5.5 billion, while EQT stands at a market cap of about $15 billion.
The post-merger $35-billion-plus valuation comes from the combined company’s anticipated enterprise value, which takes into account factors other than market capitalization.
The deal is contingent upon, among other things, the Federal Energy Regulatory Commission authorizing the Mountain Valley Pipeline to begin operating once construction is complete.
Equitrans Midstream is the largest stakeholder among five partners in the Mountain Valley Pipeline joint venture, owning approximately 49% of the project.
The 42-inch-diameter Mountain Valley Pipeline is set to transport up to 2 billion cubic feet of natural gas daily from West Virginia through six Virginia counties, ending at a Transco compressor station in Pittsylvania County.
A $370 million extension, MVP Southgate, is planned to run 31 miles from Pittsylvania County to Rockingham County, North Carolina, and to transport 550 million cubic feet of gas per day after its projected June 2028 completion.
Supporters say the Mountain Valley Pipeline will help move natural gas from Marcellus and Utica shale deposits to mid- and south Atlantic U.S. markets, meeting a demand for energy. Opponents say the project is unnecessary, dangerous and harmful to the environment.
