Integrated energy player, EQT Corporation (EQT - Free Report) announced that it would sell its wholly owned subsidiary, Sunrise Pipeline, LLC, to EQT Midstream Partners, L.P. (EQM - Free Report) .
The sales proceeds will consist of $507.5 million cash and $32.5 million of common and general partners units. EQT Midstream Partners also agreed to pay additional consideration of $110 million related to a third-party transportation contract if it becomes effective by Dec 31, 2014.
Based in Pittsburgh, Pennsylvania, EQT Corporation is an integrated energy company with an emphasis on natural gas supply activities in the Appalachian area, including production and gathering, natural gas distribution and transmission and, energy efficiency solutions, primarily in the eastern and western coastal regions of the United States.
EQT is a low-cost producer with a strategic midstream presence. The company's superior cost structure and above-average growth may alleviate concerns related to struggling natural gas prices. With an increasing reserve structure and a projected higher number of Marcellus wells to be drilled in the coming five years (around 132 wells drilled in 2012 and 153 expected in 2013), we believe that the company exhibits industry-leading organic growth momentum.
EQT recently increased its 2013 production sales volume guidance to a range of 340 billion cubic feet equivalent (Bcfe) to 350 Bcfe from 335 Bcfe, representing an estimated 33% rise year over year. We expect EQT to exceed its guidance, aided by the low-risk and high-growth drilling locations in the Marcellus Shale, where sales volume more than doubled year over year in the first quarter of 2013.
We believe EQT will move towards growth aided by the low-risk and high-growth drilling locations in the Marcellus Shale. The Marcellus is expected to continue to be EQT's esteemed asset and a potential Upper Devonian/Utica program will likely complement the company’s growth.
EQT holds a Zacks Rank #2 (short-term Buy rating). However, there are other Zacks Ranked #1 (Strong Buy) stocks in the oil and gas industry like Delek Logistics Partners, L.P. (DKL - Free Report) and W&T Offshore Inc. (WTI - Free Report) .