Mail Stop 3561
September 7, 2018
Robert J. McNally
President
Equitrans Midstream Corporation
2200 Energy Drive
Canonsburg, PA 15317
Re: Equitrans Midstream Corporation
Registration Statement on Form 10-12B
Filed August 10, 2018
File No. 1-38629
Dear Mr. McNally:
We have reviewed your filing and have the following comments. In some of
our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by providing
the
requested information or advise us as soon as possible when you will respond.
If you do not
believe our comments apply to your facts and circumstances, please tell us why
in your
response.
After reviewing your response to these comments, we may have additional
comments.
Exhibit 99.1
Questions and Answers about the Separation and Distribution, page 1
1. Please add a question and answer discussing the estimated costs you
expect to incur
in connection with the separation and distribution. In that regard, we
note your
discussion of separation costs in the introduction to your pro forma
financial
information on page 81. We also note your risk factor disclosure on page
44 that you
may incur "certain tax costs in connection with the Separation, which
may be
material."
Robert J. McNally
Equitrans Midstream Corporation
September 7, 2018
Page 2
2. Here or in your Summary, please describe the material assets and
liabilities that will
be transferred to you by EQT and disclose the amount of the distribution
and cash
settlement to be paid to EQT and how you arrived at the amount of the
distribution.
Information Statement Summary
Business
The Company Overview, page 10
3. Please revise the depiction of your simplified organizational and
ownership structure
on page 12 to include EQT Midstream Services LLC, which you refer to
throughout
the information statement as the "EQM General Partner."
Business Segments
Transmission, page 15
4. We note your disclosure here that the Mountain Valley Pipeline ("MVP")
has a
targeted capacity of 2.0 Bcf per day, and that the MVP Joint Venture has
secured a
total of 2.0 Bcf per day of firm capacity commitments at 20-year terms.
Since the
entirety of the targeted capacity of the MVP thus appears to be subject
to firm
capacity commitments, please revise to explain how the MVP Joint Venture
can be
"currently in negotiation with additional shippers that have expressed
interest in the
MVP project," as you state on page 16.
The Separation and Distribution, page 24
5. We note that EQT intends to dispose of its shares in your company "as
soon as
practicable," per your disclosure in this section and elsewhere in your
information
statement. Please tell us if EQT is actively contemplating any sales of
its retained
shares and whether there is any minimum period of time following the
distribution
during which EQT will refrain from distributing its retained shares.
Please also revise
to explain why EQT must dispose its retained shares no later than five
years after the
distribution. We note in that regard your disclosure on page 48 that EQT
may "retain
a significant ownership interest in [you] for a period of time, not
exceeding five
years."
6. We note that the distribution and separation are subject to the
satisfaction or waiver
by EQT of certain conditions. If EQT waives any condition and the impact
of such
waiver is material to EQT's shareholders, please tell us how EQT intends
to
communicate such waiver to its shareholders.
Robert J. McNally
Equitrans Midstream Corporation
September 7, 2018
Page 3
Summary Historical and Pro Forma Financial Information, page 28
7. The introductory paragraph refers to the historical statement of
operations data for the
three months ended March 31, 2018 and the balance sheet data as of March
31, 2018.
However, the tables reflect to the historical statement of operations
data for the six
months ended June 30, 2018 and the balance sheet data as of June 30,
2018. In
addition, in the second paragraph, you disclose the unaudited pro forma
condensed
combined balance sheet data reflects the financial position as if the
Pro Forma Events
occurred on March 31, 2018. However, the unaudited pro forma condensed
combined balance sheet data reflects the financial position as if the
Pro Forma Events
occurred on June 30, 2018. Please revise or advise.
Dividend Policy
Our Dividend Policy, page 76
8. Please revise to include here the tabular summaries of historical cash
distributions
declared by EQGP and EGM that you currently provide on pages F-26 and
F-53. In
doing so, please disclose whether any amounts you might pay would be
based upon
similar or different historical considerations. Clarify whether EQT has
historically
had sufficient cash on hand to pay dividends or whether they used
borrowings.
9. You disclose here and on pages 23 and 70 that EQM's debt agreements
contain
restrictions on the payment of distributions, and that if EQM cannot
make
distributions to you or EQGP, you will be unable to pay dividends to
your
shareholders. Please revise to identify and briefly describe these
restrictions.
Management's Discussion and Analysis
Reconciliation of EQM Non-GAAP Financial Measures, page 99
10. Please explain to us why you include a reconciliation of net income to
adjusted
EBITDA and distributable cash flow and net cash provided by operating
activities to
distributable cash flow of EQM given that the financial statements of
EQM are not
included in the filing. In addition, please disclose why you believe
that presentation
of the non-GAAP measures of EQM is useful to investors regarding your
financial
condition and results of operations. Please refer to Item 10(e)(1)(i) of
Regulation S-
K.
11. Please explain to us why you believe it is appropriate to include
non-GAAP measures
Adjusted EBITDA attributable to the EQM-RMP Mergers and Adjusted EBITDA
attributable to other acquisitions in the reconciliation.
Robert J. McNally
Equitrans Midstream Corporation
September 7, 2018
Page 4
12. A discussion of adjustments (g) and (h) appear to have been omitted from
the
footnotes. Please revise accordingly.
Capital Resources and Liquidity
Capital Requirements, page 105
13. You state here and on pages 15, 103, and 117 that you estimate capital
expenditures
of approximately $750 million on gathering expansion projects, including
the 1.2 BcF
per day Hammerhead project which will connect Pennsylvania and West
Virginia
production to the MVP primarily for EQT. Please revise your disclosure
here to
estimate how much you will spend on the Hammerhead project.
Certain Relationships and Related Person Transactions
Separation and Distribution Agreement
Transfer of Assets and Liabilities, page 142
14. You list here several examples of assets which EQT will transfer to you
pursuant to
the Separation and Distribution Agreement. Please also provide examples
of the
liabilities that EQT will transfer to you pursuant to the agreement.
Tax Matters Agreement, page 146
15. Please disclose the general terms of the restrictions on your ability to
enter into the
transactions listed here.
We remind you that the company and its management are responsible for
the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
Robert J. McNally
Equitrans Midstream Corporation
September 7, 2018
Page 5
You may contact Scott Stringer, Staff Accountant, at (202) 551-3272 or
Bill
Thompson, Accounting Branch Chief, at (202) 551-3344 if you have questions
regarding
comments on the financial statements and related matters. Please contact
Parhaum J.
Hamidi, Special Counsel, at (202) 551-3421 or me at (202) 551-3720 with any
other
questions.
Sincerely,
/s/ Mara L. Ransom
Mara L. Ransom
Assistant Director
Office of Consumer
Products