Equitrans Midstream In Strategic Transaction Talks - What's On The Cards?

Equitrans Midstream Corp ETRN reported fourth-quarter FY23 operating revenue of $360.6 million, missing the estimate of $366.9 million.

Revenue benefitted from higher gathered volumes, partially offset by lower water volumes. Adjusted EPS was $0.32, beating the estimate of $0.20.

Operating expenses remained relatively flat Y/Y at $175.3 million due to a $7.7 million decrease in costs related to the Rager Mountain natural gas storage field incident, partly offset by a $5.8 million increase in selling, general and administrative expenses on higher personnel costs and depreciation expenses.

Operating income rose to $185.3 million from $179.9 million a year ago. Adjusted EBITDA for the quarter was $272 million.

“Following enactment of the Fiscal Responsibility Act of 2023, we have made substantial construction progress on the Mountain Valley Pipeline, and the major tasks to complete the pipeline continue to narrow,” said Diana M. Charletta, president and chief executive officer for Equitrans Midstream.

“ETRN is now targeting construction completion and commissioning in the second quarter of 2024, at a total estimated project cost ranging from approximately $7.57 billion to approximately $7.63 billion.”

Operating cash flow totaled $1.02 billion and retained free cash flow was negative $(388.5) million in the year. The company achieved 8% Y/Y transmission pipeline throughput growth in the year.

The company paid a quarterly cash dividend of $0.15 per common share on February 14, 2024, to common shareholders of record at the close of business on February 6, 2024.

As of December 31, 2023, Equitrans Midstream reported $6.3 billion of consolidated debt and $258.9 million of cash.

FY24 Outlook: Equitrans Midstream expects net income of $375 million – $455 million; Adjusted EBITDA of $1.235 billion – $1.315 billion; Deferred Revenue of $145 million; and free cash flow of $(145) million – $(65) million.

“Our Board of Directors has been engaged in a process with third parties that have expressed interest in strategic transactions with our Company,” said Thomas F. Karam, Equitrans’ executive chairman. “Our board has engaged outside advisors and the process is ongoing. There is no guarantee that any transaction will result from this process.”

Price Action: ETRN shares are trading higher by 3.42% at $10.89 on the last check Tuesday.