US-based EQT has signed an agreement with Peoples Natural Gas to sell its natural gas distribution business, Equitable Gas Company, for $720m.
As part of the deal, EQT will obtain about 200 miles of regulated transmission pipelines and four storage pools with a total of 15.1 billion cubic feet working gas capacity.
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The assets are located around multiple counties in Pennsylvania and are related to the company’s existing transmission assets. They will enhance the company’s transportation and storage capabilities.
Equitable gas has about 4,000 miles of pipeline and provides natural gas distribution services to around 275,000 customers in Pennsylvania, West Virginia and Kentucky.
EQT CEO David Porges said that the transaction will help the company to focus on its growing natural gas and midstream business.
"The proposed transaction provides capital to accelerate the monetisation of our reserves beyond 2013 and also adds to our Marcellus midstream assets," added Porges.
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By GlobalDataPeoples Gas and EQT, has also decided to sign long-term contracts for gas transmission, supply and storage services, which will allow supply of local and Marcellus gas of about 35 billion cubic feet per year to Peoples Natural Gas.
Peoples Natural Gas president and CEO Morgan O’Brien said that the joint business will provide significant advantages to the Western Pennsylvania community.
"Furthermore, the greater aggregation of customers will be more attractive to marketers and is expected to attract more marketers that will create greater competition for customers’ supply needs," O’Brien added.
The transaction is expected to be complete by the end of 2013, subject to regulatory approvals.
EQT also plans to sell some of the selective midstream assets, which is expected to generate about $40m per year, in the form of EBITDA, based on certain purchase price adjustments.
Image: EQT Corporation to sell natural gas distribution business to Peoples Natural Gas for $720m. Photo: Courtesy of Ross.
