Peoples Natural Gas to Purchase Equitable Gas
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<strong> UPDATED: 12:03 12/20/12 </strong>
Pittsburgh-based EQT Corporation announced it is selling its natural gas transmission business, Equitable Gas, to Peoples Natural Gas for $720 million. The deal also includes 200 miles of Pennsylvania pipelines and storage pools, and long-term commercial contracts for EQT to provide gas transmission and storage services to Peoples.
“EQT is a production, midstream, and utility company today, Peoples is purely a utility company. We’re going to be acquiring their utility business, so we will continue to be just a utility business here in Western Pennsylvania,” said Morgan O’Brien, President and CEO of Peoples Natural Gas.
EQT will then focus solely on production and midstream business. The company said the pipeline assets it’s acquiring should generate at least $40 million in revenues annually, before interest, taxes, depreciation and other expenses.
“Today’s announcement allows us to focus on and reinvest in our rapidly growing natural gas production and midstream businesses,” said EQT CEO David Porges.
EQT said this transaction will be beneficial for southwestern Pennsylvania by providing a growth opportunity in the form of capital to continue investing in drilling, production and transportation programs. In addition, it will facilitate local use of Marcellus gas, further reducing the region’s reliance on gas from the U.S. Gulf Coast. It is also expected to spur job growth.
“Our equity investors have committed significant capital to the Peoples business to start replacing old pipe, that has created hundreds of jobs here already, using the equitable pipes to replace those will create even more jobs in this region,” said O’Brien.
Peoples said it will be able to realize operational efficiency savings through the deal, especially for a region in which many streets are serviced by more than one natural gas company.
“Having two utility companies serve the same neighborhoods is inefficient and more expensive to consumers, so the opposite of that is having one utility serve this region, it’s more efficient and less expensive to consumers,” said O’Brien.
And, O’Brien said the deal keeps two major companies intact in southwestern Pennsylvania.
“Nothing is leaving the region, both companies are still going to be here using the same local financial institutions, the same law firms, the same engineering firms, so businesses locally won’t be impacted by this.”
Peoples currently serves approximately 420,000 homes and businesses in 18 western Pennsylvania counties. The Equitable Gas assets to be acquired are in Pennsylvania, West Virginia and Kentucky. The deal must be approved by federal regulators and those in Pennsylvania, West Virginia and Kentucky.