Please ensure Javascript is enabled for purposes of website accessibility

Why Equitrans Midstream Stock Is Soaring Today

By Matthew DiLallo – Jun 15, 2020 at 3:26PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The midstream company is close to completing its simplification transaction.

What happened

Shares of Equitrans Midstream (ETRN 1.22%) surged more than 17% by 2:30 p.m. EDT on Monday. Fueling the energy company's rally was the approval of its merger with affiliate EQM Midstream (EQM)

So what

In late February, Equitrans Midstream announced a series of strategic actions designed to simplify its structure and bolster its financial profile. One of the notable moves it proposed was acquiring all the outstanding EQM Midstream units that it didn't already own in a share-for-unit exchange. Investors in both companies have now approved that merger agreement and the issuance of new common and preferred shares by Equitrans to complete the deal. The companies expect to close the transaction on June 17. 

A person checking virtual check boxes.

Image source: Getty Images.

The transaction will create one company to own and operate a large portfolio of midstream assets in the Northeast. That will simplify its corporate structure as well as increase the trading liquidity of Equitrans stock and lower its cost of capital. 

Now what

Once the consolidation transaction closes, Equitrans will have two primary objectives: Finish the MVP pipeline project and shore up its balance sheet. As things currently stand, Equitrans expects to complete the long-delayed MVP pipeline by early next year. Once it finishes that project and pays down some of the associated debt, Equitrans could be able to start returning more cash to investors via a higher dividend or share repurchase program.  

Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

EQM Midstream Partners, LP Stock Quote
EQM Midstream Partners, LP
Equitrans Midstream Corporation Stock Quote
Equitrans Midstream Corporation
$7.48 (1.22%) $0.09

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.