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EQT to sell natural gas distribution business for $720 mln

Last updated: 14:08 20 Dec 2012 GMT, First published: 15:08 20 Dec 2012 GMT

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EQT Corp (NYSE:EQT) has agreed to sell its natural gas distribution business to Peoples Natural Gas for $720 million in cash, in an effort to focus on natural gas production. 

EQT also said it will reduce its annual dividend, effective January 2013, to 12 cents per share, reflecting the blend of its two remaining core businesses - the dividend-supporting midstream business and the capital-intensive production business. 

EQT's natural gas distribution business, called Equitable Gas, provides natural gas distribution services to around 275,000 customers in Pennsylvania, West Virginia, and Kentucky, and owns about 4,000 miles of pipeline.

“Today’s announcement allows us to focus on and reinvest in our rapidly growing natural gas production and midstream businesses," said CEO of EQT, David Porges. 

"The proposed transaction provides capital to accelerate the monetization of our reserves beyond 2013 and also adds to our Marcellus midstream assets."

As part of the deal, EQT will receive around 200 miles of regulated transmission pipelines, as well as four storage pools that have a total of 15.1 Bcf working gas capacity. These assets are strategically located across multiple counties in Pennsylvania and connect to EQT’s existing transmission assets, which will increase its transportation and storage capabilities.

Peoples Gas has also agreed to enter long-term contracts for gas transmission, supply, and storage services with EQT, which will secure supply of local, Marcellus gas of around 35 Bcf per year to Peoples.

The deal requires regulatory approvals, which are expected by the end of 2013. As a result, the sale is not expected to impact EQT’s previously announced 2013 capital program.

"The combined utility will yield substantial benefits to the Western Pennsylvania community by creating significant operational efficiencies, relative to the pipeline systems; promoting greater competition for gas marketers; and continuing to support local gas producers," added president and CEO of Peoples, Morgan O'Brien. 

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