EQT Midstream Beats Its 4Q15 Earnings Estimates
Oil's Well That Ends Well? EQT Midstream's 4Q15 Results
EQT Midstream’s 4Q15
EQT Midstream Partners (EQM) reported its 4Q15 earnings on February 4, 2016. EQT Midstream’s 4Q15 EBITDA ( earnings before interest, tax, depreciation, and amortization ) increased to $128.6 million from $85.9 million in 4Q14, a YoY (year-over-year) increase of 49.7%. EQM’s EBITDA stood at $449 million in 2015 and $255.6 million in 2014.
According to Wall Street estimates, EQM’s peers Western Gas Partners (WES), Antero Midstream Partners (AM), and Crestwood Equity Partners (CEQP) are expected to post a YoY EBITDA growth of 24.3%, 111.4%, and 10.4%, respectively, in 4Q15 against 4Q14. EQM alone constitutes ~4.5% of the Global X MLP ETF (MLPA).
EQT Midstream beat its 4Q15 EBITDA estimate. For 4Q15, the consensus estimate was $120.9 million and analysts’ adjusted EBITDA stood at $134.9 million, a beat of 11.7%.
EQT Midstream’s 4Q15 and 2015 EBITDA drivers
The jump in EQM’s 4Q15 and 2015 EBITDA was mainly driven by the acquisition of gathering assets from its sponsor, expansion projects placed into service, and higher firm reservation contracts. Under firm contracts, a fixed monthly fee is charged for reservation of pipeline capacity regardless of whether the capacity is used.
EQM’s total gathered volumes increased by 19.1% YoY in 4Q15 versus 4Q14. 79% of total gathered volumes in 4Q15 were from firm contracts.
EQM’s transmission pipeline throughput increased by 5.1% YoY in 4Q15 versus 4Q14, driven by strong Marcellus and Utica production.
EQT Midstream’s distributions
EQM declared a distribution of $0.71 per unit for 4Q15. This represents a ~22.0% YoY increase from 4Q14 and a ~5.2% sequential increase over 3Q15. Distribution growth is driven by growth in distributable cash flows. EQT Midstream’s distributable cash flow for 4Q15 was $111.9 million. Compared with the $76.2 million during the fourth quarter of 2014, this is a YoY jump of 72.9%. The increase in distributable cash flows drove EQM’s coverage ratio. Despite a 22% distribution growth, EQM’s TTM (trailing-12-month) coverage stood at 1.7x by the end of the fourth quarter.
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