PITTSBURGH--(BUSINESS WIRE)--Equitrans Midstream Corporation (NYSE: ETRN) and EQM Midstream Partners, LP (NYSE: EQM), today, announced financial and operational results for the third quarter 2019.

Q3 2019 Highlights:

• Generated 94% of transmission operating revenue from firm reservation fees
• Generated 52% of gathering operating revenue from firm reservation fees
• Delivered third quarter adjusted EBITDA at high end of Q3 guidance
• Achieved record gathered volume of 8.2 BBtu per day

"Almost one year ago, ETRN emerged as an independent midstream company with strong fundamentals and today, we remain committed to becoming the premier infrastructure services provider in North America," said Thomas F. Karam, chairman and chief executive officer. "With support from our Boards of Directors, our employees have worked hard to deliver several milestone accomplishments - from structure simplification and elimination of the incentive distribution rights, to the closing of the Eureka/Hornet asset acquisition, to the standing up of new company policies, programs, and procedures - all while executing on our in-flight projects. We have come a long way in a very short time and look forward to an even brighter future."

"The third quarter results continue to demonstrate our focused approach to operating in a low commodity price environment," said Diana M. Charletta, president and chief operating officer. "Our main priority is to execute on our large growth projects, which are key to serving the growing demand in the mid-Atlantic and Southeast regions of the United States. Once placed in-service, these assets will provide meaningful firm EBITDA contributions to our business and will open up additional expansion opportunities to further meet the growing demand."

THIRD QUARTER 2019 RESULTS

ETRN announced net loss attributable to ETRN of $(65.8) million for the third quarter 2019; and ETRN will receive $136.0 million in cash from its ownership in EQM. During the quarter, ETRN also directly incurred $0.3 million of selling, general and administrative expenses.

For the third quarter 2019, net loss attributable to EQM was $(10.5) million; adjusted EBITDA was $335.0 million; net cash provided by operating activities was $234.6 million; and distributable cash flow was $234.2 million. The Non-GAAP Disclosures section of this news release provides reconciliations of non-GAAP financial measures from their most comparable GAAP financial measure.

ETRN and EQM net loss for the third quarter 2019 was impacted by a $298.7 million impairment charge to goodwill and net intangible assets. ETRN also incurred a $6.8 million impairment charge to deferred taxes related to the goodwill write-down. The impairments were primarily driven by lower forecast natural gas production growth behind the Rice Midstream Partners LP (RMP) gathering assets, which EQM acquired in July 2018, and the Eureka Midstream Holdings, LLC (Eureka) and Hornet Midstream Holdings, LLC (Hornet) gathering assets. EQM acquired 60% of Eureka and 100% of Hornet in April 2019.

For the third quarter 2019, EQM operating revenue increased by $43.9 million, or 12.0%, compared to the same quarter last year. The increase in revenue was primarily related to higher contracted firm gathering capacity and the addition of the Eureka and Hornet assets. Operating expenses increased by $308.4 million compared to the third quarter 2018, with $298.7 million related to the impairment expense. The remaining increase was primarily related to the addition of the Eureka and Hornet assets, as well as higher gathering system throughput and additional assets placed in-service.

EQM's third quarter 2018 results have been retrospectively recast to include the pre-acquisition results of RMP, which came under common control in 2017.

QUARTERLY DIVIDEND AND DISTRIBUTION

ETRN

For the third quarter 2019, ETRN will pay a quarterly cash dividend of $0.45 per share on November 22, 2019 to ETRN shareholders of record at the close of business on November 13, 2019.

EQM

For the third quarter 2019, EQM will pay a quarterly cash distribution of $1.16 per common unit on November 13, 2019 to EQM common unitholders of record at the close of business on November 1, 2019.

EQM expects to maintain a quarterly distribution of $1.16 per common unit and ETRN expects to maintain a quarterly dividend of $0.45 per share at least through the in-service date of the Mountain Valley Pipeline (MVP). Upon completion of MVP, the distribution and dividend growth rates will be reassessed.

Ongoing Maintenance

Ongoing maintenance capital expenditures are cash expenditures made to maintain, over the long-term, EQM operating capacity or operating income. EQM ongoing maintenance capital expenditures net of expected reimbursements and excluding the non-controlling interest share of Eureka were $12.9 million for the third quarter 2019 and $30.4 million year-to-date. EQM forecasts full-year 2019 ongoing maintenance capital expenditures of $55 million, excluding the non-controlling interest share of Eureka.

OUTLOOK

EQM

The full-year 2019 forecast provided below reflects the acquisition of 60% of Eureka and 100% of Hornet, which closed on April 10, 2019. Financial results of Eureka are consolidated in EQM and ETRN financial statements for accounting purposes.

BUSINESS AND PROJECT UPDATES

Mountain Valley Pipeline

The MVP JV is working through the project’s remaining legal and regulatory challenges and is targeting a late 2020 full in-service date at an overall project cost of $5.3 - $5.5 billion. On November 4, 2019, Consolidated Edison, Inc. disclosed that it intends to exercise an option to cap its investment in the MVP project. EQM expects to fund up to $86 million of the shortfall, which would increase EQM's ownership in the MVP JV from 45.5% to approximately 47% and would bring EQM's funding portion to approximately $2.7 billion. EQM has funded approximately $1.7 billion through the third quarter 2019.

MVP Southgate

MVP Southgate is currently in the regulatory review process with the Federal Energy Regulatory Commission (FERC) and numerous state and federal agencies. The approximately 70-mile pipeline is expected to receive gas from MVP in Virginia and transport the gas to new delivery points in Rockingham and Alamance Counties, North Carolina. With a total project cost estimate of $450 million to $500 million, MVP Southgate is backed by a 300 MMcf per day firm capacity commitment from PSNC Energy and, as designed, the pipeline has expansion capabilities up to 900 MMcf per day of total capacity. Subject to the FERC and other regulatory agency approvals, MVP Southgate is expected to be placed in-service in 2021. EQM has a 47.2% ownership interest in MVP Southgate and will operate the pipeline.

Hammerhead Pipeline

Hammerhead is a gathering header pipeline that will span approximately 64 miles from southwestern Pennsylvania to Mobley, West Virginia, where both MVP and the Ohio Valley Connector originate. With a total estimated project cost of $555 million, the pipeline is expected to provide 1.6 Bcf per day of capacity, of which 1.2 Bcf per day is contracted under a 20-year firm capacity commitment by EQT Corporation (EQT). Year-to-date 2019, EQM invested approximately $265 million in Hammerhead and expects to invest approximately $90 million in the project for the remainder of 2019. A portion of Hammerhead is expected to be operational by year-end 2019 and will provide interruptible service until MVP is placed in-service, at which time the firm capacity commitment will begin.

Equitrans Expansion Project

A portion of the Equitrans Expansion Project (EEP) commenced operations with interruptible service in the third quarter 2019. EEP provides capacity of approximately 600 MMcf per day and offers access to several markets through interconnects with Texas Eastern Transmission, Dominion Transmission, and Columbia Gas Transmission. EEP will also provide delivery into MVP and once MVP is placed in-service, firm transportation agreements for 550 MMcf per day of capacity will commence under 20-year terms.

About Equitrans Midstream Corporation:

Equitrans Midstream Corporation (ETRN) has a premier asset footprint in the Appalachian Basin and is one of the largest natural gas gatherers in the United States. With a rich 135-year history in the energy industry, ETRN was launched as a standalone company in 2018 and, through its subsidiaries, has an operational focus on gas gathering systems, transmission and storage systems, and water services assets that support natural gas producers across the Basin. ETRN is helping to meet America’s growing need for clean-burning energy, while also providing a rewarding workplace and enriching the communities where its employees live and work. ETRN owns the non-economic general partner interest and a majority ownership of the limited partner interest in EQM.

Visit Equitrans Midstream Corporation at www.equitransmidstream.com

About EQM Midstream Partners:

EQM Midstream Partners, LP (EQM) is a growth-oriented limited partnership formed to own, operate, acquire, and develop midstream assets in the Appalachian Basin. As one of the largest gatherers of natural gas in the United States, EQM provides midstream services to producers, utilities, and other customers through its strategically located natural gas transmission, storage, and gathering systems, and water services to support energy development and production in the Marcellus and Utica regions. EQM owns approximately 950 miles of FERC-regulated interstate pipelines and also owns and/or operates approximately 1,900 miles of high- and low-pressure gathering lines.

Visit EQM Midstream Partners, LP at www.eqm-midstreampartners.com