Pennsylvania Gas Utility to Buy Neighboring Utility Equitable Gas Company

EQT Corporation today announced that it has entered into a definitive agreement for the transfer of its natural gas distribution business, Equitable Gas Company, LLC, to Peoples Natural Gas.

As part of the transaction, EQT will receive cash proceeds of $720 million, subject to certain purchase price adjustments, and select midstream assets and commercial arrangements, which are expected to generate at least $40 million in EBITDA (earnings before interest, taxes, depreciation, and amortization) per year.

Both Equitable Gas Company and Peoples Natural Gas offer customer choice programs.

Moreover, the service areas largely overlap in Western Pennsylvania, and consolidation under one company could ease marketing and customer enrollment for retail suppliers.

Current residential migration to competitive natural gas supply at Equitable is only 6%. At Peoples Natural Gas, residential migration is 26%.

Morgan O'Brien, President and CEO of Peoples Natural Gas states, "The combined utility will yield substantial benefits to the Western Pennsylvania community by creating significant operational efficiencies, relative to the pipeline systems; promoting greater competition for gas marketers; and continuing to support local gas producers."

O'Brien continued, "Combining the companies' respective pipeline systems will result in a more streamlined and efficient operating system for customers. 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."

Equitable Gas provides natural gas distribution services to approximately 275,000 customers in Pennsylvania, West Virginia, and Kentucky; and owns approximately 4,000 miles of pipeline.

The transaction requires regulatory approvals from the Pennsylvania Public Utility Commission, West Virginia Public Service Commission, Kentucky Public Service Commission, and the Federal Energy Regulatory Commission; and is also subject to review under the Hart-Scott-Rodino Act. EQT expects to receive the required approvals by the end of 2013.