EQT Midstream Partners LP, operator of natural-gas pipelines in the Marcellus Shale region, raised $262.5 million in a U.S. initial public offering, pricing the units at the top end of the proposed range.
EQT Midstream, being taken public by parent EQT Corp., sold 12.5 million common units at $21 each, according to a statement today. The Pittsburgh-based company earlier offered them for $19 to $21.
EQT Midstream’s IPO is the first in the U.S. in more than a month, after Facebook Inc. raised $16 billion in a May 17 offering. The drought has helped put global IPOs on pace to raise the smallest yearly amount since 2009, according to data compiled by Bloomberg.
At the IPO price, EQT Midstream’s annual dividend of $1.40 a share would pay investors about 6.7 percent. That compares with the 6.1 percent 12-month yield of Williams Partners LP and the 6.3 percent annual payout to MarkWest Energy Partners LP investors, Bloomberg data show.
EQT Corp. accounted for 65 percent of total gas transmission and gathering volumes at EQT Midstream in the three months through March 31, according to a regulatory filing. EQT Midstream’s growth will partly depend on its ability to win additional contracts with other gas producers, the filing shows.
EQT Midstream will operate in the Marcellus Shale region in Pennsylvania and West Virginia, where EQT Corp. is one of the biggest gas producers, according to the filing. Dry gas production in the Northeast will almost double by 2035 compared with 2009, primarily because of resources in the Marcellus Shale, the filing shows, citing the U.S. Energy Information Administration.
Net IPO proceeds to EQT Midstream, estimated at about $230 million, will be used to pay a cash distribution to the parent, cover some capital spending planned in the next two years, and replenish working cash.
EQT Midstream, scheduled to begin trading tomorrow, will list on the New York Stock Exchange under the symbol EQM. Citigroup Inc. and Barclays Plc led the offering.