Equitrans Earnings: The Mountain Valley Pipeline Resumes Construction

Equitrans’ ETRN second-quarter results met our expectations, with 2023 EBITDA guidance reaffirmed at a midpoint of $1.025 billion compared with our estimate of $1.05 billion. Free cash flow guidance was boosted by about $25 million based on year-to-date results and lower expected capital spending. We expect some incremental upside related to the Mountain Valley Pipeline later this year as it enters service. When the MVP enters service, Equitrans plans to issue about $800 million to $1 billion in debt at the MVP level, which will allow it to address near-term maturities of $300 million and $400 million in 2024 and 2025. After updating our model, we are maintaining our $15 fair value estimate and narrow moat rating.

After the excitement over the MVP over the past few weeks, the U.S. Supreme Court writ has allowed the pipeline to resume construction, and it is on track to meet its year-end in-service date. Last week, the court granted an emergency petition from the Mountain Valley Pipeline’s lawyers after stay orders from the U.S. Court of Appeals for the 4th Circuit from earlier July had halted construction. While the decision is considered temporary and provisional, further delays in the pipeline’s construction would likely add hundreds of millions to the construction tab, so this remains a good outcome for the MVP. Sen. Joe Manchin, a Democrat from West Virginia, and the Biden administration filed supporting briefs with the Supreme Court.