(Reuters) – U.S. pipeline operator Equitrans Midstream Corp’s unit on Thursday signed a deal worth $1.03 billion to take control of two pipelines that connect the Marcellus and Utica shale basins, the nation’s biggest gas producing region.
The unit, EQM Midstream Partners LP, will buy a 60 percent stake in Eureka Midstream Holdings LLC and whole of Hornet Midstream Holdings LLC, from a fund managed by Morgan Stanley.
EQM will pay $860 million in cash and assume $170 million of debt, as part of the deal.
Gas companies have been betting heavily on pipeline infrastructure in the Utica and Marcellus shale basins, which span across Pennsylvania, Ohio and West Virginia, after a resurgence in drilling activity over the last few years led to tight pipeline capacity.
Eureka Midstream is a 190-mile gathering pipeline system in Ohio and West Virginia that services both Utica and Marcellus production, while Hornet Midstream is a 15-mile, high-pressure gathering system in West Virginia that connects to Eureka system.
“These assets will complement EQM’s basin-leading gathering and transmission system, allowing us to continue being the low-cost provider for gas transportation and, increasingly, for water handling as well” EQM Chief Executive Officer Thomas Karam said.
Citi and Guggenheim Securities, LLC acted as financial advisers for the deal, which is expected to close by mid April.
Reporting by Shanti S Nair in Bengaluru; Editing by Shinjini Ganguli