EQT Corporation (NYSE:EQT) shares are trading higher after the company announced it entered into a definitive deal with funds managed by Blackstone Credit & Insurance (BXCI) to form a new midstream joint venture.

As per the deal, BXCI will provide EQT $3.5 billion of cash consideration in exchange for a non-controlling equity interest in the joint venture.

This values the JV at approximately $8.8 billion, or 12x EBITDA. The deal provides EQT with a substantial equity capital solution at an accretive cost of capital.

EQT will also retain rights to growth projects linked to the contributed assets, including the planned Mountain Valley Pipeline expansion and the MVP Southgate project.

EQT intends to use the proceeds from the transaction to reduce its term loan, revolving credit facility, and redeem or tender senior notes.

Pro-forma for this deal, along with the recent sale of its remaining non-operated assets in northeast Pennsylvania, EQT expects to exit 2024 with approximately $9 billion in net debt.

EQT President and CEO Toby Z. Rice stated, "This transaction underscores the ultra-high-quality nature of EQT's regulated midstream assets, which service one of the strongest power demand growth regions in the United States underpinned by long-term contracts with the region's leading utilities."

"Importantly, through this joint venture EQT preserves the benefits of the Equitrans acquisition by retaining the long-term value from synergy capture and growth projects. We look forward to working with Blackstone to optimize the value of these assets and together explore strategic opportunities across its leading portfolio of energy, power and digital infrastructure in the years ahead."

EQT Chief Financial Officer Jeremy Knop stated, "Blackstone is a leader in providing capital solutions to large corporations and we are thrilled to partner with them in this unique transaction, crafting a tailor-made equity financing solution at a price significantly below EQT's equity cost of capital while preserving key tax attributes. When we announced the Equitrans acquisition earlier this year, we made an unwavering commitment to debt reduction."

"We have now delivered on that promise, with announced divestitures to date totaling $5.25 billion of projected cash proceeds, above the high-end of our $3 billion-$5 billion asset sale target, and several quarters ahead of schedule."

The transaction is subject to customary closing adjustments, required regulatory approvals, and clearances, and is expected to close in the fourth quarter of 2024.

Investors can gain exposure to the stock via Invesco S&P 500 Equal Weight Energy ETF (NYSE:RSPG) and First Trust Natural Gas ETF (NYSE:FCG).

Price Action: EQT shares are up 3.22% at $47.40 premarket at the last check Monday.

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