Blackstone in Talks to Acquire EQT Natural Gas Pipeline Stakes

By David French

(Reuters) – Private equity firm Blackstone (NYSE:BX) is in advanced negotiations to acquire minority stakes in interstate natural gas pipelines owned by EQT Corp (NYSE:EQT) for approximately $3.5 billion, according to sources familiar with the matter.

If successful, this deal would assist EQT in reducing the debt incurred from its recent acquisition of Equitrans Midstream (NYSE:ETRN). Blackstone plans to make this investment through its credit and insurance division. The sources requested anonymity due to the confidential nature of the discussions, noting that an agreement could be reached in the coming weeks.

EQT will maintain operational control over the pipelines under the new arrangement with Blackstone. This transaction offers Blackstone a stable income stream to support its various investment strategies while increasing its exposure to energy infrastructure assets, including the Mountain Valley Pipeline, a significant and controversial 300-mile natural gas line from West Virginia to Virginia.

Mountain Valley began operations in June after a lengthy legal struggle over its construction. The sale includes one of EQT's most important assets, a stake in the entity that owns the pipeline.

Neither EQT nor Blackstone has commented on the deal. Pittsburgh-based EQT has interests in 940 miles of interstate pipelines with a capacity of 4.4 billion cubic feet per day of natural gas, as stated in a presentation from March.

In July, EQT reported that its pipeline portfolio generated nearly $700 million in adjusted earnings before interest, tax, depreciation, and amortization. The Equitrans acquisition transitioned EQT from an exploration and production company to a vertically integrated natural gas provider but resulted in significant debt of nearly $14 billion.

The company stated it plans to reduce its debt by $5 billion through operational cash inflows and asset sales. They have already committed to divesting $1.1 billion in assets to Equinor and plan to sell minority stakes in the pipelines.

Blackstone has extensive experience in energy infrastructure, with existing holdings that include pipeline operator Tallgrass Energy and a stake in the company controlling the Elba Island liquefied natural gas (LNG) facility.

The New York-based firm, managing over $1 trillion in assets, announced in September 2023 that it would consolidate its credit and insurance divisions to enhance returns and asset value. In recent years, money managers have sought opportunities to invest low-cost insurance premiums into higher-return strategies while ensuring policyholder payouts.