EQT Midstream Partners Announces 2013 Financial and CapEx Forecast
PITTSBURGH--(BUSINESS WIRE)-- EQT Midstream Partners, LP (EQM), an EQT Corporation company, today announced its 2013 financial and capital expenditure forecast. Adjusted EBITDA is expected to be $80 - $83 million and distributable cash flow is expected to be $61 - $64 million. Operating revenues are seasonal, based on utility customer contracts, and will be approximately $2 million per quarter higher in the first and fourth quarters, than in the second and third quarters.
For 2013, EQT Midstream Partners, LP (the Partnership) forecasts total capital expenditures to be approximately $73 million, and intends to increase Equitrans transmission capacity by 450 MMcf per day. The Partnership expects maintenance and regulatory capital expenditures to vary quarter-to-quarter, primarily based on more activity when weather is favorable. The forecast does not include acquisition capital or financial impacts of potential acquisitions.
The Partnership forecasts expansion capital expenditures of $38 million for 2013. Approximately $25 million will be for the Low Pressure East Pipeline project, which will upgrade nearly 26 miles of existing pipeline in Greene, Washington and Allegheny counties of Pennsylvania. The project will add 150 MMcf per day of transmission capacity. The remaining expansion capital expenditures will fund new interconnects and dehydration upgrades, adding 300 MMcf per day of transmission capacity.
The Partnership forecasts ongoing maintenance capital expenditures of $17.2 million for 2013. Ongoing maintenance capital expenditures are cash expenditures made to maintain, over the long term, the Partnerships operating capacity or operating income. Ongoing maintenance capital expenditures exclude funded regulatory compliance capital expenditures and reimbursable maintenance capital expenditures.
Funded Regulatory Compliance
The Partnership forecasts funded regulatory compliance capital expenditures of $12 million for 2013. Funded regulatory compliance capital expenditures relate to discrete expenditures necessary to comply with two specific regulatory compliance initiatives; system segmentation and isolation, and valve pit remediation. In order to fund these two initiatives, the Partnership retained $32 million from the initial public offering (IPO). Funded regulatory compliance capital expenditures do not impact the calculation of distributable cash flow.
The Partnership forecasts reimbursable maintenance capital expenditures of $6 million in 2013 for the bare steel replacement program. EQT Corporation has agreed to reimburse the Partnership for bare steel replacement capital expenditures in the event that ongoing maintenance capital expenditures exceed $17.2 million in any year. EQT Corporation will reimburse the Partnership for the lesser of (i) the amount of bare steel replacement capital expenditures during such year; and (ii) the amount by which ongoing maintenance capital expenditures exceed $17.2 million. EQT Corporation will also reimburse the Partnership for plugging and abandonment expenditures, if any.
Adjusted EBITDA and Distributable Cash Flow
As used in this press release, adjusted EBITDA means net income (loss) plus net interest expense, income tax expense, depreciation and amortization expense, and non-cash, long-term compensation expense less other income and the Sunrise lease payment. As used in this press release, distributable cash flow means adjusted EBITDA less net cash paid for interest expense, maintenance capital expenditures, and income taxes. Adjusted EBITDA and distributable cash flow are non-GAAP supplemental financial measures that management and external users of the Partnerships financial statements, such as industry analysts, investors, lenders, and rating agencies, use to assess:
- the Partnerships operating performance as compared to other publicly traded partnerships in the midstream energy industry, without regard to historical cost basis or, in the case of adjusted EBITDA, financing methods;
- the ability of the Partnerships assets to generate sufficient cash flow to make distributions to the Partnerships unitholders;
- the Partnerships ability to incur and service debt and fund capital expenditures; and
- the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.
The Partnership believes that adjusted EBITDA and distributable cash flow provide useful information to investors in assessing the Partnerships financial condition and results of operations. Adjusted EBITDA and distributable cash flow should not be considered alternatives to net income, operating income, cash flows from operating activities, or any other measure of financial performance or liquidity presented in accordance with generally accepted accounting principles (GAAP). Adjusted EBITDA and distributable cash flow have important limitations as analytical tools because they exclude some, but not all, items that affect net income and net cash provided by operating activities. Additionally, because adjusted EBITDA and distributable cash flow may be defined differently by other companies in the industry, the Partnerships definition of adjusted EBITDA and distributable cash flow may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
About EQT Midstream Partners:
EQT Midstream Partners, LP is a growth-oriented limited partnership formed by EQT Corporation to own, operate, acquire and develop midstream assets in the Appalachian basin. The Partnership provides midstream services to EQT Corporation and third-party companies through two primary assets: the Equitrans Transmission and Storage System and the Equitrans Gathering System. The Partnership has a 700 mile FERC-regulated, interstate pipeline system and more than 2,100 miles of FERC-regulated, low-pressure gathering lines.
Visit EQT Midstream Partners, LP at www.eqtmidstreampartners.com
The Partnership is unable to provide a reconciliation of its projected adjusted EBITDA and projected distributable cash flow to net income or net cash provided by operating activities, the most comparable financial measures calculated in accordance with GAAP, because of uncertainties associated with projecting future net income and changes in assets and liabilities.
Disclosures in this press release contain certain forward-looking statements. Statements that do not relate strictly to historical or current facts are forward-looking. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the expectations of plans, strategies, objectives and growth and anticipated financial and operational performance of the Partnership and its subsidiaries, including guidance regarding the Partnerships projected adjusted EBITDA and projected distributable cash flow; the effect of the Sunrise lease on adjusted EBITDA and distributable cash flow; projected operating revenues; capital expenditures, including the amount of capital expenditures to be reimbursed by EQT Corporation, capital budget; and infrastructure programs (including the timing, cost, and transmission capacity resulting from such projects). These statements involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The Partnership has based these forward-looking statements on current expectations and assumptions about future events. While the Partnership considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks and uncertainties, most of which are difficult to predict and many of which are beyond the Partnerships control. The risks and uncertainties that may affect the operations, performance and results of the Partnerships business and forward-looking statements include, but are not limited to, those set forth under Item 1A, Risk Factors of the Partnerships Form 10-Q for the quarter ended June 30, 2012, as updated by any subsequent filed 10-Qs. Any forward-looking statement speaks only as of the date on which such statement is made and the Partnership does not intend to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise.
Information in this press release regarding EQT Corporation and its subsidiaries, other than the Partnership, is derived from publicly available information published by EQT.
EQT Midstream Partners, LP
Nate Tetlow, 412-553-5834
Investor Relations Manager
Patrick Kane, 412-553-7833
Chief Investor Relations Officer
Natalie Cox, 412-395-3941
Corporate Director, Communications
Source: EQT Midstream Partners, LPCopyright Business Wire 2012