The Zhitong Finance App learned that according to people familiar with the matter on Friday, private equity firm Blackstone Group (BX.US) is in in-depth negotiations and plans to buy minority shares in the interstate gas pipeline held by EQT Energy (EQT.US) for about US$3.5 billion. If the negotiations are successful, the deal will help EQT Energy cut the debt it accumulated when it acquired pipeline operator Equitrans Midstream earlier this year.
People familiar with the matter said Blackstone plans to invest through its credit and insurance departments. If negotiations do not break down, it is expected that an agreement may be signed within the next few weeks. Under the agreement, EQT will continue to operate these pipelines.
The deal will help Blackstone earn a steady income that can be used for its various investment strategies, while also exposing it to energy infrastructure assets, including the controversial Mountain Valley Pipeline — a 300-mile gas pipeline that stretches from West Virginia to Virginia.
Mountain Valley Pipeline was put into operation in June of this year after several years of construction legal disputes. EQT's shares in the pipeline entity are one of the most significant assets in the portfolio being sold.
According to the company's March report, EQT holds shares in 940 miles of interstate pipelines, which have a daily capacity of 4.4 billion cubic feet of natural gas.
In July, EQT said its pipeline portfolio generated nearly $700 million in adjusted earnings before interest, taxes, depreciation and amortization. The deal with EquiTrans helped EQT transform from an exploration and production company to a full range of natural gas suppliers. However, the deal left EQT burdened nearly $14 billion in debt.
In July, the company said it plans to cut $5 billion in debt through cash and asset sales generated from operations. EQT has agreed to sell assets worth $1.1 billion to Equinor and said at the time that it plans to sell a minority interest in the pipeline.
Kuroishi is no stranger to energy infrastructure. Its current portfolio includes shares in pipeline operator Tallgrass Energy and the company that controls the Elba Island liquefied natural gas (LNG) facility.
Blackstone currently manages more than $1 trillion in assets, and it announced in September 2023 that it would merge its credit and insurance divisions into one unit as part of strengthening returns and the value of its managed assets.