EQT Midstream Partners Reports Strong Growth in 2013

  EQT Midstream Partners Reports Strong Growth in 2013

                 Fourth Quarter Distribution Increase of 31%

Business Wire

PITTSBURGH -- February 13, 2014

EQT Midstream Partners, LP (NYSE: EQM), an EQT Corporation (EQT) company,
today announced fourth quarter and full-year 2013 financial and operating
results. Net income for the quarter totaled $30.8 million and adjusted EBITDA
was $36.3 million. Distributable cash flow was $26.7 million for the quarter.
Adjusted operating income was $30.8 million, or 17% higher than the same
quarter last year. For the year, adjusted EBITDA was $119.5 million and
distributable cash flow was $101.4 million. The non-GAAP financial measures
are reconciled in the Non-GAAP Disclosures section included in this news
release.

On December 17, 2013, EQT Midstream Partners (Partnership) entered into a
capital lease with EQT for the lease of its Allegheny Valley Connector (AVC)
facilities, which includes a 200-mile, FERC-regulated pipeline that EQT
acquired in December 2013 as part of the transfer of its natural gas
distribution business. The Partnership operates the AVC as part of its
transmission and storage system. Revenue and expenses associated with the AVC
are included in the Partnership’s financial statements; however, the monthly
lease payment to EQT offsets the impact on the Partnership’s distributable
cash flow. As a result, fourth quarter 2013 operating results are discussed on
an adjusted basis, excluding the AVC. The lease payment totaled $1.0 million
for the fourth quarter. The revenues and expenses associated with AVC are
found in the reconciliation table in the Non-GAAP Disclosures section of this
news release.

Fourth quarter adjusted operating revenues increased $7.7 million, or 18%,
compared to the same quarter last year. The increase was primarily due to
increased contracted transmission capacity and higher system throughput
related to growth in Marcellus Shale development. Adjusted operating expenses
increased $0.7 million versus the fourth quarter of 2012, excluding a non-cash
$2.5 million favorable regulatory reserve reversal in the fourth quarter of
2012.

Quarterly Distribution

The Partnership announced a quarterly cash distribution of $0.46 per unit for
the fourth quarter of 2013. The distribution will be paid on February 14, 2014
to all unitholders of record at the close of business on February 4, 2014. The
quarterly cash distribution is $0.03 per unit, or 7% higher, than the third
quarter 2013 and $0.11 per unit, or 31% higher, than the fourth quarter 2012.

Guidance

The Partnership forecasts first quarter 2014 adjusted EBITDA to be $36 - $39
million and reiterates its full-year 2014 forecasted adjusted EBITDA of $170 -
$175 million and distributable cash flow of $148 - $153 million. The
Partnership expects to maintain a $0.03 per unit quarterly distribution
increase through at least 2014. The financial and distribution guidance does
not include financial impacts of potential acquisitions.

CAPITAL EXPENDITURES

Expansion

Fourth quarter expansion capital expenditures totaled $15.1 million, of which
$7.0 million was related to the Low Pressure East Pipeline project that was
completed in the fourth quarter and added 150 BBtu per day of transmission
capacity, $3.9 million related to the Jefferson compressor expansion project,
and the remainder related to new interconnects and dehydration upgrades. For
the year, expansion capital expenditures totaled $50.6 million, including
$25.2 million for the Low Pressure East Pipeline project, $9.2 million for the
Jefferson compressor expansion project, and $16.2 for new interconnects and
other system upgrades.

Ongoing Maintenance

Ongoing maintenance capital expenditures are cash expenditures made to
maintain, over the long term, the Partnership’s operating capacity or
operating income. Ongoing maintenance capital expenditures are all maintenance
capital expenditures other than reimbursable maintenance capital expenditures
and funded regulatory compliance capital expenditures. Ongoing maintenance
capital expenditures totaled $5.3 million in the fourth quarter 2013 and $13.2
million for the year.

Reimbursable Maintenance

Plugging and abandonment and bare steel replacement capital expenditures are
referred to as reimbursable maintenance capital expenditures in the
reconciliation table in the Non-GAAP Disclosures section of this news release.

Plugging and Abandonment

EQT has agreed, for ten years following the Partnership’s initial public
offering (IPO), to reimburse the Partnership for plugging and abandonment
expenditures associated with certain identified wells. There were no plugging
and abandonment capital expenditures in the fourth quarter. For the year, EQT
reimbursed the Partnership $0.6 million related to plugging and abandonment
capital expenditures.

Bare Steel Replacement Program

EQT has agreed, for ten years following the IPO, to reimburse the Partnership
for certain bare steel replacement capital expenditures in the event that
ongoing maintenance capital expenditures and bare steel capital expenditures
exceed $17.2 million in any calendar year. EQT 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 and bare steel capital expenditures exceed
$17.2 million. Bare steel capital expenditures totaled $3.9 million in the
fourth quarter 2013 and $6.6 million for the year. In 2013, ongoing
maintenance capital expenditures totaled $13.2 million and bare steel
replacement capital expenditures totaled $6.6 million, for a total of $19.8
million. As a result, the bare steel reimbursement was $2.6 million in 2013.

Funded Regulatory Compliance

Funded regulatory compliance capital expenditures relate to discrete
expenditures necessary to comply with certain regulatory and other legal
requirements. The Partnership has identified 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 of proceeds from the IPO. Funded regulatory compliance capital
expenditures do not impact the calculation of distributable cash flow. Funded
regulatory compliance capital expenditures totaled $2.2 million in the fourth
quarter 2013 and $12.1 million for the year. Since the IPO, the Partnership
has incurred $18.9 million of funded regulatory compliance capital
expenditures.

NON-GAAP DISCLOSURES

Adjusted EBITDA and Distributable Cash Flow

As used in this news release, adjusted EBITDA means net income plus net
interest expense, depreciation and amortization, income tax expense (if
applicable), non-cash long-term compensation expense and other non-cash
adjustments (if applicable), less other income and capital lease payments
prior to the acquisition of the underlying assets. As used in this news
release, distributable cash flow means adjusted EBITDA less net cash interest,
ongoing maintenance capital expenditures and reimbursable maintenance capital
expenditures plus reimbursable maintenance capital expenditures to be
reimbursed by EQT. Distributable cash flow should not be viewed as indicative
of the actual amount of cash that the Partnership has available for
distributions from operating surplus or that the Partnership plans to
distribute. Adjusted EBITDA and distributable cash flow are non-GAAP
supplemental financial measures that management and external users of the
Partnership’s consolidated financial statements, such as industry analysts,
investors, lenders and rating agencies, use to assess:

  *the Partnership’s 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 Partnership’s assets to generate sufficient cash flow
    to make distributions to the Partnership’s unitholders;
  *the Partnership’s 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 Partnership’s
financial condition and results of operations. Adjusted EBITDA and
distributable cash flow should not be considered as alternatives to net
income, operating income, net cash provided by operating activities or any
other measure of financial performance or liquidity presented in accordance
with 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 its industry, the Partnership’s
definition of adjusted EBITDA and distributable cash flow may not be
comparable to similarly titled measures of other companies, thereby
diminishing their utility. The table below reconciles adjusted EBITDA and
distributable cash flow with net income and net cash provided by operating
activities as derived from the statements of consolidated operations and the
statements of consolidated cash flows to be included in the Partnership’s
annual report on Form 10-K for the year ended December 31, 2013.

Reconciliation of Adjusted EBITDA and Distributable Cash Flow

                                      Three Months Ended  Twelve Months Ended
                                      December 31, 2013    December 31, 2013
                                      (in thousands)
Operating revenues:
Transmission and storage              $    47,998          $    173,881
Gathering                                 2,809              12,010     
Total operating revenues                   50,807               185,891
Operating expenses:
Operating and maintenance                  7,861                28,954
Selling, general and administrative        5,835                21,497
Depreciation and amortization             5,697              21,190     
Total operating expenses                  19,393             71,641     
Operating income                           31,414               114,250
Other income, net                          397                  1,242
Interest expense, net                      1,059                1,672
Income tax expense                        -                  4,053      
Net income                            $    30,752         $    109,767    
Add:
Interest expense, net                      1,059                1,672
Depreciation and amortization              5,697                21,190
Income tax expense                         –                    4,053
Non-cash long-term compensation            209                  981
expense
Non-cash adjustment                        –                    (680       )
Less:
Other income, net                          (397      )          (1,242     )
Lease payments                            (1,030    )         (16,231    )
Adjusted EBITDA                       $    36,290          $    119,510
Less:
Cash interest, net                         (275      )          (939       )
Ongoing maintenance capital                (5,347    )          (13,192    )
expenditures
Reimbursable plugging & abandonment        –                    (566       )
maintenance capital expenditures
Reimbursable bare steel replacement        (3,892    )          (6,574     )
maintenance capital expenditures
Add:
Reimbursable plugging & abandonment        –                    566
maintenance capital expenditures
Reimbursable bare steel replacement       (116      )         2,566      
maintenance capital expenditures
Distributable cash flow               $    26,660         $    101,371    
Distributions declared (a):
Limited Partner                       $    21,992          $    74,505
General Partner                       $    1,047          $    2,323      
Total                                 $    23,039          $    76,828
Coverage ratio                        1.16x                1.32x


(a) Reflects cash distribution of $0.46 per limited partner unit for the
fourth quarter and $1.66 per limited partner unit for the year-ended 2013.

                                     Three Months Ended  Twelve Months Ended
                                      December 31, 2013    December 31, 2013
                                      (in thousands)
Net cash provided by operating        $    33,723          $    121,335
activities
Adjustments:
Interest expense, net                      1,059                1,672
Current tax expense                        –                    4,315
Capital lease payments                     (1,030    )          (16,231    )
Other, including changes in working       2,538              8,419      
capital
Adjusted EBITDA                       $    36,290         $    119,510    
                                                                           

Adjusted Operating Revenues, Adjusted Operating Expenses, Adjusted Operating
Income and Adjusted Income Before Income Taxes

Adjusted operating revenues, adjusted operating expenses, adjusted operating
income and adjusted income before income taxes, all of which exclude the
impact of the AVC, are non-GAAP supplemental financial measures that are
presented because they are important measures used by management to evaluate
the Partnership’s performance. The AVC did not have a net positive or negative
impact on the Partnership’s distributable cash flow. Adjusted operating
revenues, adjusted operating expenses, adjusted operating income and adjusted
income before income taxes should not be considered as alternatives to
operating revenues, operating expenses, operating income or income before
income taxes, or any other measure of financial performance or liquidity
presented in accordance with GAAP. The table below reconciles adjusted
operating revenues, adjusted operating expenses, adjusted operating income and
adjusted income before income taxes with operating revenues, operating
expenses, operating income and income before income taxes as derived from the
statements of consolidated operations to be included in the Partnership’s
annual report on Form 10-K for the year ended December 31, 2013.

                             Three Months Ended December 31,
                               2013                                2012
                                          Adjustment   Adjusted
(in thousands)                 Reported   to exclude   Results     Recast
                               Results    AVC          (excludes   Results^(1)
                                                       AVC)
Operating Revenues:
Operating revenues –         $ 36,864   $ —          $ 36,864    $ 32,095
affiliate
Operating revenues – third     13,943     (1,288  )    12,655      9,695
party
Total operating revenues       50,807     (1,288  )    49,519      41,790
                                                                   
Operating Expenses
Operating and maintenance      7,861      (75     )    7,786       8,110
Selling, general and           5,835      (183    )    5,652       2,494
administrative
Depreciation and               5,697      (443    )    5,254       4,887
amortization
Total operating expenses       19,393     (701    )    18,692      15,491
Operating income               31,414     (587    )    30,827      26,299
Other income, net              397        —            397         458
Interest expense, net          1,059      (843    )    216         259
Income before income taxes   $ 30,752   $ 256       $ 31,008    $ 26,498
                                                                   

^(1) 2012 has been recast to include historical results of Sunrise Pipeline,
LLC, which was merged into the Partnership on July 22, 2013.

Q4 2013 Webcast Information

EQT Midstream Partners will host a live webcast with security analysts today
at 11:30 a.m. ET. Topics include fourth quarter and full-year 2013 financial
results, operating results, and other matters. The webcast is available at
www.eqtmidstreampartners.com and a replay will be available for seven days
following the call.

EQT Corporation (EQT), which is the Partnership's general partner and owner of
a 44.6% equity interest in the Partnership, will also host a webcast with
security analysts today at 10:30 a.m. ET. The Partnership's unitholders are
encouraged to listen-in, as the discussion may include topics relevant to the
Partnership, such as EQT's financial and operational results, potential asset
dropdown transactions, and specific reference to the Partnership's 2013
results. The webcast can be accessed via www.eqt.com and will be available as
a replay for seven days following the call.

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
Transmission and Storage System and a Gathering System. The Partnership owns
700 miles, and operates an additional 200 miles, of FERC-regulated interstate
pipelines; and owns more than 1,600 miles of FERC-regulated, low-pressure
gathering lines.

Visit EQT Midstream Partners, LP at www.eqtmidstreampartners.com

Cautionary Statements

The Partnership is unable to provide a reconciliation of its projected
adjusted EBITDA and projected distributable cash flow to projected net income
or projected net cash provided by operating activities, the most comparable
financial measures calculated in accordance with generally accepted accounting
principles (GAAP), because of uncertainties associated with projecting future
net income and changes in assets and liabilities.

Disclosures in this news 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 Partnership’s transmission and
storage and gathering revenue growth and volume growth; revenue projections;
infrastructure programs (including the timing, cost, capacity and sources of
funding with respect to such programs); natural gas production growth in the
Partnership’s operating areas for EQT Corporation (EQT) and third parties;
asset acquisitions, including the Partnership’s ability to complete any asset
purchases from EQT or third parties and anticipated synergies associated with
any acquisition; internal rate of return (IRR); compound annual growth rate
(CAGR), capital commitments, projected capital and operating expenditures,
including the amount and timing of capital expenditures reimbursable by EQT,
capital budget and sources of funds for capital expenditures; liquidity and
financing requirements, including funding sources and availability;
distribution rate and growth; projected adjusted EBITDA, and projected
distributable cash flow, including the effect of the AVC lease on
distributable cash flows; future AVC lease payments; the effects of government
regulation, litigation, and tax position. These forward looking 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 Partnership’s control. The risks and
uncertainties that may affect the operations, performance and results of the
Partnership’s business and forward-looking statements include, but are not
limited to, those set forth under Item 1A, “Risk Factors” of the Partnership’s
Form 10-K for the year ended December 31, 2012 and in the Partnership’s Form
10-K for the year ended December 31, 2013 to be filed with the SEC, and as
updated by any subsequent Form 10-Q’s. 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.

This release serves as qualified notice to nominees under Treasury Regulation
Sections 1.1446-4(b)(4) and (d). Please note that 100% of the Partnership’s
distributions to foreign investors are attributable to income that is
effectively connected with a United States trade or business. Accordingly, all
of the Partnership’s distributions to foreign investors are subject to federal
income tax withholding at the highest effective tax rate for individuals or
corporations, as applicable. Nominees, and not the Partnership, are treated as
the withholding agents responsible for withholding on the distributions
received by them on behalf of foreign investors.

EQT Midstream Partners, LP
Statements of Consolidated Operations (unaudited)
                               
                                   Three Months Ended    Twelve Months Ended
                                   December 31,          December 31,
(Thousands, except per unit        2013       2012^(1)   2013^(1)    2012^(1)
amounts)
Operating Revenues:
Operating revenues – affiliate   $ 36,864   $ 32,095   $ 142,437   $ 106,180
Operating revenues – third         13,943    9,695     43,454     30,730  
party
Total operating revenues           50,807     41,790     185,891     136,910
                                                                     
Operating expenses:
Operating and maintenance          7,861      8,110      28,954      29,405
Selling, general and               5,835      2,494      21,497      16,614
administrative
Depreciation and amortization      5,697     4,887     21,190     15,740  
Total operating expenses           19,393    15,491    71,641     61,759  
Operating income                   31,414     26,299     114,250     75,151
Other income, net                  397        458        1,242       8,228
Interest expense, net              1,059     259       1,672      2,944   
Income before income taxes         30,752     26,498     113,820     80,435
Income tax expense                 —         2,096     4,053      17,313  
Net income                       $ 30,752  $ 24,402  $ 109,767  $ 63,122  
                                                                     
Calculation of limited partner   $ 30,752   $ 24,402   $ 109,767   $ 63,122
interest in net income:
Net income
Less:
Pre-acquisition net income         —          (1,933 )   (6,189  )   (26,563 )
allocated to parent
General partner interest in        (1,201 )   (479   )   (2,927  )   (791    )
net income
Limited partner interest in      $ 29,551  $ 21,990  $ 100,651  $ 35,768  
net income
                                                                     
Net income per limited partner   $ 0.62     $ 0.63     $ 2.47      $ 1.03
unit - basic
Net income per limited partner   $ 0.62     $ 0.63     $ 2.46      $ 1.03
unit - diluted
                                                                     
Weighted average limited
partner units outstanding –        47,809     34,679     40,739      34,679
basic
Weighted average limited
partner units outstanding –        47,930     34,743     40,847      34,734
diluted
                                                                             

^(1) The first six months of 2013 and full-year 2012 have been recast to
include historical results of Sunrise Pipeline, LLC, which was merged into the
Partnership on July 22, 2013.

EQT Midstream Partners, LP
Operating Results
                                                   
                              Three Months Ended      Twelve Months Ended
                              December 31,            December 31,
                              2013      2012^(1)     2013^(1)    2012^(1)
OPERATING DATA (in BBtu per
day):
Transmission pipeline           1,318      794          1,146        606
throughput
CAPITAL EXPENDITURES (in
thousands):
Expansion capital             $ 15,115   $ 11,280     $ 50,595     $ 162,574
expenditures
Maintenance capital
expenditures:
Ongoing maintenance             5,347      4,416        13,192       13,815
Funded regulatory               2,242      3,761        12,093       6,993
compliance
Reimbursable P&A                —          1,469        566          3,563
maintenance
Reimbursable bare steel        3,892     4,296      6,574      6,577   
maintenance
Total maintenance capital      11,481    13,942     32,425     30,948  
expenditures
Total capital expenditures    $ 26,596   $ 25,222    $ 83,020    $ 193,522 
                                                                             

^(1) The first six months of 2013 and full-year 2012 have been recast to
include historical results of Sunrise Pipeline, LLC, which was merged into the
Partnership on July 22, 2013.

Contact:

EQT Midstream Partners
Analyst inquiries please contact:
Nate Tetlow – Investor Relations Manager, 412-553-5834
ntetlow@eqtmidstreampartners.com
or
Patrick Kane – Chief Investor Relations Officer, 412-553-7833
pkane@eqtmidstreampartners.com
or
Media inquiries please contact:
Natalie Cox – Corporate Director, Communications, 412-395-3941
ncox@eqtmidstreampartners.com
 
Press spacebar to pause and continue. Press esc to stop.