ETRN Accelerated Total Transformation February 27, 2020
Accelerated Total Transformation Four Actions to Reshape ETRN Agreements with Purchasing 25.3 MM ETRN to Acquire Dividend and Capital EQT ETRN Shares(2) EQM Allocation Policy 15-year gas gathering Unique opportunity Each public…
Accomplishing Key Objectives Final step to simplified single C-Corp security with enhanced corporate governance Asymmetric risk profile through highly predictable cash flow Commercial alignment with EQT allows optimized drilling…
Phase One Blend, Broaden and Extend Effective Immediately MVC of 3.0 Bcf/d Flexibility to execute combo development 15-year contract Single MVC eliminates legacy deficiencies Over 100,000 core WV acres dedicated Lower credit…
Phase Two Blend, Broaden and Extend Effective with MVP in-service MVC step-up Rate relief limited to 3 years Peaking at 4.0 Bcf/d 125 MM, 140 MM and 35 MM 5-year PA water MVC(1) 60 MM per year of firm water revenue 3-year…
Gas Gathering Agreement Significant step-up and extension of gathering MVC drives predictable cash flows MVC Revenue PV-10 Prior EQT MVCs = 2.8 B Phase 2 MVC Phase 1 = 4.7 B Phase 1 MVC Phase 2 = 4.9 B New EQT MVC covers…
Commercial Agreements with EQT Modest net impact to cash flows from commercial agreements MM 2020E 2021E 2022E 2023E Gas gathering agreement 0 (125) (140) (35) PA water MVC(1) 0 20 20 20 Henry Hub upside(2) 0 0 - 60 0 - 60 0 - 60…
Gas Gathering Agreement Securing growth opportunity and enhancing capital efficiency Estimated 500 MM net present value Acreage Map from investment supporting development of newly dedicated West Virginia acreage Over 100,000 acres…
Gas Gathering Agreement Combo development provides midstream capital efficiencies Systematic buildout of gas gathering system yields Combo Development Example midstream capital efficiency Concentrated footprint reduces overall build…
Pro Forma ETRN Growth Capex Forecasted Growth Capex (B) 2021E 2023E Growth Capex Detail (%) 365 MM annual gathering growth CAPEX to support mid-single digit forecasted volume CAGR CAPEX includes capital contributions to MVP JV…
Purchase of 25.3 MM Shares of ETRN from EQT Unique opportunity to buy back significant block of ETRN stock Shares acquired & retired in March 2020 Upfront cash of 52 MM 52 MM upfront cash Rate relief over 2-years with MVP…
Accounting for New Gathering Contract Revenue recognition under GAAP GAAP will utilize an average gathering rate for the MVCs over the life of the contract Difference between cash received and revenue Cash Received recognized is…
Deferred Revenue Impact on Adjusted EBITDA B 2020E 2021E 2022E 2023E Previous EQM adjusted EBITDA(1) 1.38 No prior guidance Deferred revenue (0.45) (0.11) (0.12) (0.28) Pro Forma ETRN adjusted EBITDA(1) 0.92 1.40 1.46 1.63…
ETRN to Acquire EQM Roll-up transaction simplifies structure and provides multiple benefits Acquisition Terms Strategic Rationale ETRN will acquire EQM in a 100% share-for- Single C-Corp security eliminates complexity unit exchange…
Pro Forma ETRN Projections Adjusted EBITDA (B)(1) Distributable Cash Flow (B)(1) 13% CAGR 2020 - 2023 Free Cash Flow (B)(1) DCF Coverage 1.8 billion Free Cash Flow 2021-2023 (1) See slide 29 for important disclosures…
ETRN Emerging as a Strong C-Corp Business Fundamentals support long-term value creation Retained Free Cash Flow (B)(2) Highly predicable cash flow profile Long-term contracts 1 billion Retained Free Cash Flow Retained Free Cash…
Appendix 17
Pro Forma ETRN Forecast Summary B (except leverage & coverage metrics) 2020E 2021E 2022E 2023E Net income attributable to ETRN 0.23 0.43 0.45 0.49 Adjusted EBITDA(1) 0.92 1.40 1.46 1.63 Distributable cash flow(1) 0.90 0.94 1.04…
Gas Gathering Agreement with EQT Deal creates meaningful value for ETRN Increase in MVCs to drive Increase from 2.0 Bcf/d to 3.0 Bcf/d predictable revenues Incremental step-up in MVC upon MVP in-service(1) Long-term contract…
Water Agreement with EQT MVC for water services in PA enhances predictable cash flow profile New water services agreement for Pennsylvania development 5-year MVC Commences with MVP in-service Generates 60 MM per year of firm water…
Henry Hub Upside Structure allows EQM to participate in higher commodity price environment Potential for up to 60 MM per year of incremental cash flow Applies to the 3-year period beginning with MVPs in-service but in no case…
Net Impact to Cash Flows MM 2020E 2021E 2022E 2023E Commercial Agreements: Gas gathering agreement 0 (125) (140) (35) PA water MVC(1) 0 20 20 20 Henry Hub upside(2) 0 0 - 60 0 - 60 0 - 60 Net cash flow impact of commercial 0…
Organizational Chart Current Structure Pro Forma Structure ETRN ETRN Public Public 80.1% Interest 19.9% Interest 94.0% Interest 6.0% Interest 59.9% LP Interest Non-economic GP Interest 100.0% LP Interest Convertible…
Dividend and Capital Allocation Policy Retained free cash flow provides path to quickly de-lever Dividend Policy ETRN Consolidated Debt (B) ETRN annual dividend of 0.60 per share Expect to utilize MVP JV level debt upon MVP…
Financing Plan Ample liquidity to execute plan Financing and Liquidity Convertible Preferred EQM senior notes, EQM Term Loan A and EQM 600 MM of EQM Series A Convertible Preferred revolver will remain outstanding after the Units to…
No Offer or Solicitation; Participants in the Solicitation This communication is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe…
Where You Can Find More Information In connection with their proposed transactions, ETRN and EQM intend to file a registration statement on Form S-4, containing a joint proxy statement/prospectus (the Form S-4) with the SEC. This…
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