Equitrans: The Path Forward Is Now Clear for the Mountain Valley Pipeline

With the path forward now clear for the Mountain Valley Pipeline, we are increasing our fair value estimate to $15 per share from $10.80 after removing our MVP cancellation scenario from our model. After a multiyear battle with the courts and concerned stakeholders that had effectively blocked it, the Biden administration finally stepped in to save the Mountain Valley Pipeline. With the new legislation declaring the pipeline in the national interest and ordering the relevant agencies to issue the required permits by late June 2023, Equitrans ETRN now expects the pipeline to be in service by the end of 2023. Equitrans owns 48.1% of the pipeline via a subsidiary as part of a joint venture and will be the operator.

The pipeline will serve as a critical conduit for Appalachian production, which has been constrained by infrastructure issues including MVP delays and provide more gas that will ultimately get exported overseas. The pipeline will immediately add 2 billion cubic feet per day of much-needed capacity and can be expanded by another 500 million cubic feet per day via compression. The pipeline is expected to be fully carbon-neutral for the first 10 years of its operation via a methane abatement project and the purchase of more than $150 million in carbon offsets.

We also think Equitrans will likely bring online the related Hammerhead and MVP Southgate (Equitrans owns 47% via a joint venture) projects, and combined, all three efforts should increase EBITDA about 30% from 2023 levels. However, it’s possible that these two related projects may face other legal or permitting challenges from stymied MVP opponents, as only the MVP is protected under the legislation.