UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
FORM 10-Q
(Mark One)
  
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2018MARCH 31, 2019
or
 
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  
 FOR THE TRANSITION PERIOD FROM                TO               
  
 COMMISSION FILE NUMBER 001-35574
 
EQM Midstream Partners, LP
(Exact name of registrant as specified in its charter)
 
DELAWARE 37-1661577
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
 
625 Liberty Avenue, Suite 2000, Pittsburgh, Pennsylvania15222
(Address of principal executive offices)(Zip code)
(412) 553-5700395-2688
(Registrant's telephone number, including area code)
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x  No  ¨
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x  No  ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer   x
  
Accelerated Filer                  ¨
 
Emerging Growth Company       ¨
Non-Accelerated Filer     ¨
(Do not check if a
smaller reporting company)
 
Smaller Reporting Company ¨
  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).        Yes  ¨  No  x
 
As of September 30, 2018,March 31, 2019, there were 120,456,425200,457,630 Common Units and 1,443,015 General Partner7,000,000 Class B Units outstanding.


EQM MIDSTREAM PARTNERS, LP AND SUBSIDIARIES
IndexTABLE OF CONTETS
 
 
 Page No.
  
Glossary of Commonly Used Terms, Abbreviations and Measurements
3
  
Part I.
Financial Information:
 
   
Item 1.
Financial Statements (Unaudited):
 
   
 
Statements of Consolidated Operations for the Three and Nine Months Ended September 30,March 31, 2019 and 2018 and 2017
45
   
 
Statements of Consolidated Cash Flows for the NineThree Months Ended September 30,March 31, 2019 and 2018 and 2017
57
   
 
Consolidated Balance Sheets as of September 30, 2018March 31, 2019 and December 31, 20172018
68
   
 
Statements of Consolidated Equity for the NineThree Months Ended September 30,March 31, 2019 and 2018 and 2017
79
   
 
Notes to Consolidated Financial Statements
810
   
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
1924
   
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
3035
   
Item 4.
Controls and Procedures
3136
   
Part II.
Other Information:
 
    
Item 1.
Legal Proceedings
3237
   
Item 1A.
Risk Factors
3340
   
Item 6.
Exhibits
3944
   
Signature
4046
    


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Glossary of Commonly Used Terms, Abbreviations and Measurements
adjusted EBITDA – a supplemental non-GAAP (as defined below) financial measure defined by EQM Midstream Partners, LP (formerly known as EQT Midstream Partners, LP) and its subsidiaries (collectively, EQM) as net income attributable to EQM plus net interest expense, depreciation, amortization of intangible assets, Preferred Interest (as defined below) payments, non-cash long-term compensation expense and separation and other transaction costs less equity income, AFUDC – equity (as defined below) – equity and adjusted EBITDA of assets prior to acquisition.
Allowance for Funds Used During Construction or AFUDC(AFUDC) – carrying costs for the construction of certain long-lived regulated assets are capitalized and amortized over the related assets' estimated useful lives. The capitalized amount for construction of regulated assets includes interest cost and a designated cost of equity for financing the construction of these regulated assets.
British thermal unit – a measure of the amount of energy required to raise the temperature of one pound of water one degreeone-degree Fahrenheit.
distributable cash flow – a supplemental non-GAAP financial measure defined by EQM as adjusted EBITDA less net interest expense excluding interest income on the Preferred Interest, capitalized interest and AFUDC – debt and ongoing maintenance capital expenditures net of expected reimbursementsreimbursements.
ETRN Omnibus Agreement – the agreement, as amended and transaction costs.restated, entered into among EQM, its general partner, for limited purposes, EQM’s former general partner and Equitrans Midstream Corporation (Equitrans Midstream) in connection with the Separation (as defined below), pursuant to which, among other things, EQM agreed to provide Equitrans Midstream with a license to use the name "Equitrans" and related marks in connection with Equitrans Midstream’s business, and Equitrans Midstream agreed to provide EQM with, and EQM agreed to reimburse Equitrans Midstream for, certain general and administrative services.
Equitrans Midstream - Equitrans Midstream Corporation (NYSE: ETRN) and its subsidiaries.
EQT - EQT Corporation (NYSE: EQT) and its subsidiaries.
EQT Omnibus Agreement – the agreement, as amended and restated, entered into among EQM, its former general partner and EQT in connection the Separation (defined below) to memorialize certain indemnification obligations between EQM and EQT.
firm contracts – contracts for gathering, transmission or storage services that reserve an agreed upon amount of pipeline or storage capacity regardless of the capacity used by the customer during each month, and generally obligate the customer to pay a fixed, monthly charge.
gas – all referencesnatural gas.
Mountain Valley Pipeline (MVP) – an estimated 300 mile, 42-inch diameter natural gas interstate pipeline with a targeted capacity of 2.0 Bcf per day that will span from EQM's existing transmission and storage system in Wetzel County, West Virginia to "gas" referPittsylvania County, Virginia, providing access to natural gas.the growing Southeast demand markets.
MVP Southgate – a proposed 70-mile interstate pipeline that will extend from the MVP at Pittsylvania County, Virginia to new delivery points in Rockingham and Alamance Counties, North Carolina.
Mountain Valley Pipeline, LLC (MVP Joint Venture) – a joint venture among EQM and affiliates of each of NextEra Energy, Inc., Consolidated Edison, Inc. (Con Edison), AltaGas Ltd. and RGC Resources, Inc. that is constructing the MVP and the MVP Southgate and holds ownership interests in the MVP project and the MVP Southgate project.
Preferred Interest – the preferred interest that EQM has in EQT Energy Supply, LLC (EES).
Separation – the separation of EQT's midstream business, which was composed of the separately-operated natural gas gathering, transmission and storage and water services operations of EQT (the Midstream Business), from EQT's upstream business, which was composed of the natural gas, oil and natural gas liquids development, production and sales and commercial operations of EQT, which occurred on the Separation Date (defined below).
Separation Date – November 12, 2018.
throughput – the volume of natural gas transported or passing through a pipeline, plant, terminal or other facility during a particular period.

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AbbreviationsMeasurements
AROASU  - asset retirement obligations– Accounting Standards Update
Btu  = one British thermal unit
ASU – Accounting Standards Update
BBtu = billion British thermal units
FASB – Financial Accounting Standards Board
BcfBBtu = billion cubic feetBritish thermal units
FERC – U.S. Federal Energy Regulatory Commission
Dth Bcf   = dekatherm or million British thermal unitsbillion cubic feet
GAAP – United States Generally Accepted Accounting Principles
Mcf = thousand cubic feet
IDRs – incentive distribution rights
MMBtuMMcf  = million British thermal unitscubic feet
IPO – Initial Public Offering
MMcf  = million cubic feet
IRS – Internal Revenue Service
MMgal = million gallons
SEC – U.S. Securities and Exchange Commission
 

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PART I.  FINANCIAL INFORMATION 
Item 1.  Financial Statements

EQM MIDSTREAM PARTNERS, LP AND SUBSIDIARIES
Statements of Consolidated Operations (Unaudited) (1)(a) 
Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,		Three Months Ended 
 March 31,
2018 2017 2018 20172019 2018
(Thousands, except per unit amounts)(Thousands, except per unit amounts)
Operating revenues (2)(b)
$364,584
 $206,293
 $1,110,307
 $603,180
$389,782
 $371,026
Operating expenses: 
  
  
  
 
  
Operating and maintenance (3)(c)
48,092
 19,589
 118,534
 54,721
27,883
 27,172
Selling, general and administrative (3)(c)
29,038
 18,758
 88,490
 51,970
32,920
 26,390
Separation and other transaction costs3,513
 —
Depreciation43,567
 22,244
 126,957
 64,191
47,065
 41,280
Amortization of intangible assets10,387
 —
 31,160
 —
10,387
 10,386
Total operating expenses131,084
 60,591
 365,141
 170,882
121,768
 105,228
Operating income233,500
 145,702
 745,166
 432,298
268,014
 265,798
Equity income (4)
16,087
 6,025
 35,836
 15,413
Equity income (d)
31,063
 8,811
Other income1,345
 637
 3,193
 3,576
2,210
 904
Net interest expense (5)
41,005
 9,426
 76,740
 26,014
Net interest expense (e)
49,356
 12,670
Net income209,927
 142,938
 707,455
 425,273
251,931
 262,843
Net income attributable to noncontrolling interests—
 —
 3,346
 —
—
 2,493
Net income attributable to EQM$209,927
 $142,938
 $704,109
 $425,273
$251,931
 $260,350
          
Calculation of limited partner interest in net income: 
  
  
  
 
  
Net income attributable to EQM$209,927
 $142,938
 $704,109
 $425,273
$251,931
 $260,350
Less pre-acquisition net income allocated to parent(8,490) —
 (164,242) —
Less pre-acquisition net income allocated to EQT—
 (83,132)
Less general partner interest in net income – general partner units(2,379) (2,515) (7,145) (7,482)—
 (3,117)
Less general partner interest in net income – IDRs(70,967) (37,615) (183,253) (102,451)—
 (44,164)
Limited partner interest in net income$128,091
 $102,808
 $349,469
 $315,340
$251,931
 $129,937
          
Net income per limited partner unit – basic and diluted$1.14
 $1.28
 $3.73
 $3.91
Weighted average limited partner units outstanding – basic and diluted111,980
 80,603
 93,746
 80,603
Net income per limited partner common unit – basic$1.63
 $1.61
Net income per limited partner common unit – diluted$1.56
 $1.61
          
Cash distributions declared per unit (6)
$1.115
 $0.98
 $3.270
 $2.805
Weighted average limited partner common units outstanding – basic154,259
 80,607
Weighted average limited partner common units outstanding – diluted161,259
 80,607
   
Cash distributions declared per unit (f)
$1.145
 $1.065
 

(1)(a)As discussed in Note A,Notes 1 and 2, the consolidated financial statements of EQM have been retrospectively recast to include the pre-acquisition results of RiceEQM Olympus Midstream LLC (ROM)(EQM Olympus), Strike Force Midstream Holdings LLC (Strike Force) and RiceEQM West Virginia Midstream LLC (Rice(EQM WV), which were acquired by EQM effective on May 1, 2018 (the May 2018 Acquisition)Drop-Down Transaction), and Rice Midstream Partners LP (RMP), which was acquired by EQM effective on July 23, 2018 (the EQM-RMP Merger), because these transactions were between entities under common control.
(2)(b)Operating revenues included affiliaterelated party revenues from EQT Corporation and subsidiaries (collectively,(NYSE: EQT) (EQT) of $276.9$284.5 million and $154.2$265.6 million for the three months ended September 30,March 31, 2019 and 2018, and 2017, respectively, and $827.8 million and $445.8 million for nine months ended September 30, 2018 and 2017, respectively. See Note F.7.
(3)(c)OperatingFor the three months ended March 31, 2019, operating and maintenance expense included $11.0 million of charges from Equitrans Midstream Corporation (Equitrans Midstream). For the three months ended March 31, 2018, operating and maintenance expense included charges from EQT of $14.0 million and $10.7 million for$12.2 million. For the three months ended September 30, 2018March 31, 2019, selling, general and 2017, respectively, and $38.4 million and $29.8 million foradministrative expense included charges from Equitrans Midstream of $27.9 million. For the ninethree months ended September 30,March 31, 2018, and 2017, respectively. Selling,selling, general and administrative expense included charges from EQT of $25.7 million and $18.1 million for the three months ended September 30, 2018 and 2017, respectively, and $75.1 million and $49.7 million for the nine months ended September 30, 2018 and 2017, respectively.$23.8 million. See Note F.7.
(4)(d)Represents equity income from Mountain Valley Pipeline, LLC (the MVP Joint Venture). See Note G.8.

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(5)(e)Net interest expense included interest income on the Preferred Interest in EESEQT Energy Supply, LLC (EES) of $1.6 million and $1.7 million for the three months ended September 30,March 31, 2019 and 2018, and 2017, respectively, and $5.0 million and $5.1 million for the nine months ended September 30, 2018 and 2017, respectively.
(6)(f)Represents the cash distributions declared related to the period presented. See Note J.11.

The accompanying notes are an integral part of these consolidated financial statements.

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EQM MIDSTREAM PARTNERS, LP AND SUBSIDIARIES
Statements of Consolidated Cash Flows (Unaudited) (1)
 Nine Months Ended 
 September 30,
 2018 2017
 (Thousands)
Cash flows from operating activities: 
  
Net income$707,455
 $425,273
Adjustments to reconcile net income to net cash provided by operating activities: 
  
Depreciation126,957
 64,191
Amortization of intangible assets31,160
 —
Equity income(35,836) (15,413)
AFUDC – equity(3,585) (4,128)
Non-cash long-term compensation expense1,275
 225
Changes in other assets and liabilities: 
  
Accounts receivable2,193
 (1,106)
Accounts payable28,173
 1,848
Due to/from EQT affiliates(14,730) 5,627
Other assets and other liabilities22,420
 3,686
Net cash provided by operating activities865,482
 480,203
Cash flows from investing activities: 
  
Capital expenditures(616,365) (224,591)
Capital contributions to the MVP Joint Venture(446,049) (103,448)
May 2018 Acquisition from EQT(1,193,160) —
Principal payments received on the Preferred Interest3,281
 3,103
Net cash used in investing activities(2,252,293) (324,936)
Cash flows from financing activities: 
  
Proceeds from credit facility borrowings2,524,000
 334,000
Payments on credit facility borrowings(2,968,000) (229,000)
Proceeds from issuance of long-term debt2,500,000
 —
Debt discount and issuance costs(34,249) (2,257)
Distributions paid to unitholders(528,410) (313,515)
Distributions paid to noncontrolling interest(750) —
Acquisition of 25% of Strike Force Midstream LLC(175,000) —
Capital contributions15,672
 216
Net contributions from EQT3,660
 —
Net cash provided by (used in) financing activities1,336,923
 (210,556)
    
Net change in cash and cash equivalents(49,888) (55,289)
Cash and cash equivalents at beginning of period54,600
 60,368
Cash and cash equivalents at end of period$4,712
 $5,079
    
Cash paid during the period for: 
  
Interest, net of amount capitalized$42,652
 $31,091
    
Non-cash activity during the period for:
 
  
(Decrease) increase in capital contribution receivable from EQT$(11,758) $758
(1)As discussed in Note A, the consolidated financial statements of EQM have been retrospectively recast to include the pre-acquisition results of the May 2018 Acquisition and the EQM-RMP Merger because these transactions were between entities under common control.

The accompanying notes are an integral part of these consolidated financial statements.

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EQM MIDSTREAM PARTNERS, LP AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited) (1)
 September 30, 
 2018		 December 31, 
 2017
 (Thousands, except number of units)
ASSETS 
Current assets: 
  
Cash and cash equivalents$4,712
 $54,600
Accounts receivable (net of allowance for doubtful accounts of $717 and $446 as of September 30, 2018 and December 31, 2017, respectively)58,358
 60,551
Accounts receivable – affiliate167,481
 158,720
Other current assets9,080
 14,153
Total current assets239,631
 288,024
    
Property, plant and equipment6,127,076
 5,516,504
Less: accumulated depreciation(518,718) (405,665)
Net property, plant and equipment5,608,358
 5,110,839
    
Investment in unconsolidated entity1,300,430
 460,546
Goodwill1,384,872
 1,384,872
Intangible assets, net586,500
 617,660
Other assets146,400
 136,894
Total assets$9,266,191
 $7,998,835
    
LIABILITIES AND EQUITY 
  
Current liabilities: 
  
Accounts payable$134,026
 $105,271
Due to related party39,709
 33,919
Capital contribution payable to MVP Joint Venture463,733
 105,734
Accrued interest46,165
 11,067
Accrued liabilities16,401
 20,995
Total current liabilities700,034
 276,986
    
Credit facility borrowings22,000
 466,000
Senior notes3,455,296
 987,352
Regulatory and other long-term liabilities31,010
 29,633
Total liabilities4,208,340
 1,759,971
    
Equity: 
  
Predecessor equity—
 3,916,434
Noncontrolling interest—
 173,472
Common (120,456,425 and 80,581,758 units issued and outstanding at September 30, 2018 and December 31, 2017, respectively)5,026,431
 2,147,706
General partner (1,443,015 units issued and outstanding at September 30, 2018 and December 31, 2017)31,420
 1,252
Total equity5,057,851
 6,238,864
Total liabilities and equity$9,266,191
 $7,998,835
(1)As discussed in Note A, the consolidated financial statements of EQM have been retrospectively recast to include the pre-acquisition results of the May 2018 Acquisition and the EQM-RMP Merger because these transactions were between entities under common control.


The accompanying notes are an integral part of these consolidated financial statements.

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EQM MIDSTREAM PARTNERS, LP AND SUBSIDIARIES
Statements of Consolidated EquityCash Flows (Unaudited) (1)(a) 

 Predecessor Equity Noncontrolling Interest 
Limited Partners
Common
 
General
Partner
 Total Equity
 (Thousands)
Balance at January 1, 2017$—
 $—
 $2,008,510
 $(14,956) $1,993,554
Net income—
 —
 315,340
 109,933
 425,273
Capital contributions—
 —
 2,576
 48
 2,624
Equity-based compensation plans—
 —
 225
 —
 225
Distributions paid to unitholders—
 —
 (215,556) (97,959) (313,515)
Balance at September 30, 2017$—
 $—
 $2,111,095
 $(2,934) $2,108,161
          
Balance at January 1, 2018$3,916,434
 $173,472
 $2,147,706
 $1,252
 $6,238,864
Net income164,242
 3,346
 349,469
 190,398
 707,455
Capital contributions—
 —
 3,851
 66
 3,917
Equity-based compensation plans922
 —
 353
 —
 1,275
Distributions paid to unitholders(68,390) —
 (299,724) (160,296) (528,410)
Net contributions from EQT3,660
 —
 —
 —
 3,660
Distributions paid to noncontrolling interest—
 (750) —
 —
 (750)
Acquisition of 25% of Strike Force Midstream LLC—
 (176,068) 1,068
 —
 (175,000)
May 2018 Acquisition from EQT (2)
(1,436,297) —
 243,137
 —
 (1,193,160)
EQM-RMP Merger (2)
(2,580,571) —
 2,580,571
 —
 —
Balance at September 30, 2018$—
 $—
 $5,026,431
 $31,420
 $5,057,851
 Three Months Ended 
 March 31,
 2019 2018
 (Thousands)
Cash flows from operating activities: 
  
Net income$251,931
 $262,843
Adjustments to reconcile net income to net cash provided by operating activities: 
  
Depreciation47,065
 41,280
Amortization of intangible assets10,387
 10,386
Equity income(31,063) (8,811)
AFUDC – equity(2,346) (1,065)
Non-cash long-term compensation expense255
 499
Changes in other assets and liabilities: 
  
Accounts receivable(4,950) (2,602)
Accounts payable(72,188) (14,145)
Other assets and other liabilities(38,118) (4,427)
Net cash provided by operating activities160,973
 283,958
Cash flows from investing activities: 
  
Capital expenditures(206,735) (170,589)
Capital contributions to the MVP Joint Venture(144,763) (117,019)
Principal payments received on the Preferred Interest1,141
 1,079
Net cash used in investing activities(350,357) (286,529)
Cash flows from financing activities: 
  
Proceeds from credit facility borrowings602,000
 304,000
Payments on credit facility borrowings(145,000) (128,000)
Distributions paid to unitholders(211,292) (158,735)
Distributions paid to noncontrolling interest—
 (750)
Capital contributions—
 12,873
Net cash provided by financing activities245,708
 29,388
    
Net change in cash, restricted cash and cash equivalents56,324
 26,817
Cash, restricted cash and cash equivalents at beginning of period17,515
 54,600
Cash, restricted cash and cash equivalents at end of period (b)
$73,839
 $81,417
    
Cash paid during the period for: 
  
Interest, net of amount capitalized$88,240
 $13,532
    
Non-cash activity during the period for:
 
  
Decrease in capital contribution receivable from EQT$—
 $(10,074)
(1)(a)As discussed in Note A,Notes 1 and 2, the consolidated financial statements of EQM have been retrospectively recast to include the pre-acquisition results of the May 2018 AcquisitionDrop-Down Transaction and the EQM-RMP Merger because these transactions were between entities under common control.
(2)(b)Under common control accounting, any difference between consideration transferred
Includes $23.8 million of cash and cash equivalents and $50.0 million of cash escrowed as of March 31, 2019 associated with the net assets received at historical cost is recorded as an equity transaction. In addition, equity issuedBolt-on Acquisition (as defined in a common control transaction is recorded at an amount equal to the carrying value of the net assets transferred, even if the equity issued has a readily determinable fair value. The EQM common units issued in the May 2018 Acquisition are valued at the excess of the net assets received by EQM over the cash consideration.Note 2).



The accompanying notes are an integral part of these consolidated financial statements.

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EQM MIDSTREAM PARTNERS, LP AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
 March 31, 
 2019		 December 31, 
 2018
 (Thousands, except number of units)
ASSETS 
Current assets: 
  
Cash and cash equivalents$23,839
 $17,515
Accounts receivable (net of allowance for doubtful accounts of $792 and $75 as of March 31, 2019 and December 31, 2018, respectively) (a)
259,340
 254,390
Other current assets13,286
 14,909
Total current assets296,465
 286,814
    
Property, plant and equipment6,639,047
 6,367,530
Less: accumulated depreciation(643,662) (560,902)
Net property, plant and equipment5,995,385
 5,806,628
    
Investment in unconsolidated entity1,673,325
 1,510,289
Goodwill1,123,813
 1,123,813
Net intangible assets565,726
 576,113
Restricted cash (b)
50,000
 —
Other assets183,871
 152,464
Total assets$9,888,585
 $9,456,121
    
LIABILITIES AND EQUITY 
  
Current liabilities: 
  
Accounts payable (c)
$143,186
 $207,877
Due to Equitrans Midstream65,932
 44,509
Capital contribution payable to the MVP Joint Venture156,412
 169,202
Accrued interest41,302
 80,199
Accrued liabilities20,165
 20,672
Total current liabilities426,997
 522,459
    
Credit facility borrowings1,082,000
 625,000
Senior notes3,457,981
 3,456,639
Regulatory and other long-term liabilities67,414
 38,724
Total liabilities5,034,392
 4,642,822
    
Equity: 
  
Common (200,457,630 and 120,457,638 units issued and outstanding at March 31, 2019 and December 31, 2018, respectively)4,852,205
 4,783,673
Class B (7,000,000 and 0 units issued and outstanding at March 31, 2019 and December 31, 2018, respectively)1,988
 —
General partner (0 and 1,443,015 units issued and outstanding at March 31, 2019 and December 31, 2018, respectively)—
 29,626
Total equity4,854,193
 4,813,299
Total liabilities and equity$9,888,585
 $9,456,121
(a)Accounts receivable as of March 31, 2019 and December 31, 2018 included approximately $182.2 million and $174.8 million, respectively, of related party accounts receivable from EQT.
(b)Includes $50.0 million of cash escrowed as of March 31, 2019 associated with the Bolt-on Acquisition (as defined in Note 2).
(c)Accounts payable as of December 31, 2018 included approximately $34.0 million of related party accounts payable to EQT. There was no related party balance with EQT included in accounts payable as of March 31, 2019.

The accompanying notes are an integral part of these consolidated financial statements.

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EQM MIDSTREAM PARTNERS, LP AND SUBSIDIARIES
Statements of Consolidated Equity (Unaudited) (a)

     Limited Partners    
 Predecessor Equity Noncontrolling Interest Common Units Class B Units General Partner Total Equity
 (Thousands)
Balance at January 1, 2018$3,916,434
 $173,472
 $2,147,706
 $—
 $1,252
 $6,238,864
Net income83,132
 2,493
 129,937
 —
 47,281
 262,843
Capital contributions—
 —
 2,749
 —
 50
 2,799
Equity-based compensation plans168
 —
 331
 —
 —
 499
Distributions paid to unitholders
($1.025 per common unit)		(32,845) —
 (82,596) —
 (43,294) (158,735)
Net contributions from EQT1,015
 —
 —
 —
 —
 1,015
Distributions paid to noncontrolling interests—
 (750) —
 —
 —
 (750)
Balance at March 31, 2018$3,967,904
 $175,215
 $2,198,127
 $—
 $5,289
 $6,346,535
            
Balance at January 1, 2019$—
 $—
 $4,783,673
 $—
 $29,626
 $4,813,299
Net income—
 —
 246,699
 3,465
 1,767
 251,931
Equity-based compensation plans—
 —
 255
 —
 —
 255
Distributions paid to unitholders
($1.13 per common unit)		—
 —
 (136,117) —
 (75,175) (211,292)
Equity restructuring associated with the EQM IDR Transaction—
 —
 (42,305) (1,477) 43,782
 —
Balance at March 31, 2019$—
 $—
 $4,852,205
 $1,988
 $—
 $4,854,193
(a)As discussed in Notes 1 and 2, the consolidated financial statements of EQM have been retrospectively recast to include the pre-acquisition results of the Drop-Down Transaction and the EQM-RMP Merger because these transactions were between entities under common control.



The accompanying notes are an integral part of these consolidated financial statements.

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EQM MIDSTREAM PARTNERS, LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
A.1.Financial Statements
Organization and Basis of Presentation
EQM is a growth-oriented Delaware limited partnership.partnership formed by EQT in January 2012. Prior to the completion of the EQM IDR Transaction (defined below), EQM Midstream Services, LLC (formerly known as EQT Midstream Services, LLC) (EQM General Partner), iswas a direct, wholly ownedwholly-owned subsidiary of EQGP Holdings, LP (formerly known as EQT GP Holdings, LP) (EQGP), and iswas the general partner of EQM (the Former EQM General Partner). Following the consummation of the EQM IDR Transaction, EQGP Services, LLC, a wholly-owned indirect subsidiary of Equitrans Midstream, became the general partner of EQM (the New EQM General Partner). References in these consolidated financial statements to Equitrans Midstream refer collectively to Equitrans Midstream Corporation and its consolidated subsidiaries.
On February 21, 2018, EQT announced its plan to separate its midstream business, which was composed of the separately-operated natural gas gathering, transmission and storage and water services operations of EQT (collectively, the Midstream Business), from its upstream business, which was composed of the natural gas, oil and natural gas liquids development, production and sales and commercial operations of EQT (collectively, the Upstream Business) (the Separation). On November 12, 2018, the Separation was effected through a series of transactions that culminated in EQT's contribution of the Midstream Business to Equitrans Midstream.
On February 22, 2019, Equitrans Midstream completed its previously announced simplification transaction pursuant to that certain Agreement and Plan of Merger, dated as of February 13, 2019 (the IDR Merger Agreement), by and among Equitrans Midstream, EQM, the Former EQM General Partner, EQGP, the New EQM General Partner, Equitrans Merger Sub, LP, a Delaware limited partnership (Merger Sub), and certain other parties thereto. Pursuant to the IDR Merger Agreement, on February 22, 2019, (i) Merger Sub merged with and into EQGP (the Merger) with EQGP continuing as the surviving limited partnership and a wholly-owned subsidiary of EQM following the Merger, and (ii) each of (a) the incentive distribution rights (IDRs) in EQM, (b) the economic portion of the general partner interest in EQM and (c) the issued and outstanding common units representing limited partner interests in EQGP were canceled, and, as consideration for such cancellation, certain affiliates of Equitrans Midstream received on a pro rata basis 80,000,000 newly-issued EQM common units and 7,000,000 newly-issued Class B units (Class B units), both representing limited partner interests in EQM, and the New EQM General Partner retained the non-economic general partner interest in EQM (the EQM IDR Transaction). Additionally as part of the EQM IDR Transaction, the 21,811,643 EQM common units held by EQGP were canceled and 21,811,643 EQM common units were issued pro rata to certain affiliates of Equitrans Midstream. Following the EQM IDR Transaction, Equitrans Midstream continued to hold investments in the entities conducting the Midstream Business, which, following the EQM IDR Transaction and as of March 31, 2019, represented a 59.9% limited partner interest and the non-economic general partner interest in EQM. See Note 4 for further information.
The EQM was formedIDR Transaction constituted an exchange of equity interests between entities under common control and not a transfer of a business. Therefore, the exchange resulted in a reclassification, as of February 22, 2019, of a $43.8 million deficit capital balance from the general partner line item to the common and Class B line items in EQM's consolidated balance sheets based on the respective limited partner ownership interests. The reclassification represented an allocation of the carrying value of the exchanged general partner interest. Prior to the EQM IDR Transaction, when distributions related to the general partner interest and IDRs were made, earnings equal to the amount of distributions were allocated to the general partner before the remaining earnings were allocated to the limited partner unitholders based on their respective ownership percentages. Subsequent to the EQM IDR Transaction, no earnings will be allocated to the general partner. The allocation of net income attributable to EQM for purposes of calculating net income per limited partner unit is described in Note 11.
EQM's consolidated financial statements have been retrospectively recast to include the pre-acquisition results of the Drop-Down Transaction and the EQM-RMP Merger because these transactions represented business combinations between entities under common control. The recast is for the period the acquired businesses were under the namecommon control of EQT, Midstream Partners, LPwhich began on November 13, 2017 as a result of EQT's acquisition of Rice Energy Inc. (Rice) (the Rice Merger). EQM recorded the assets and changed its nameliabilities acquired in the Drop-Down Transaction and the EQM-RMP Merger at their carrying amounts to EQT on the effective dates of the transactions. The consolidated financial statements are not necessarily indicative of the actual results of operations if EQM Midstream Partners, LPand the assets acquired in October 2018.the Drop-Down Transaction and the EQM-RMP Merger had been operated together during the pre-acquisition periods.
The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information and with the requirements of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, these unaudited consolidated financial statements include all adjustments (consisting of only normal recurring

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adjustments, unless otherwise disclosed in this Form 10-Q) necessary for a fair presentation of the financial position of EQM as of September 30, 2018March 31, 2019 and December 31, 2017,2018 and the results of its operations, for the three and nine months ended September 30, 2018 and 2017, and its cash flows and equity for the ninethree months ended September 30, 2018March 31, 2019 and 2017. Certain previously reported amounts have been reclassified to conform to the current year presentation.2018. The balance sheet at December 31, 20172018 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.
EQM's consolidated financial statements have been retrospectively recast to include the pre-acquisition results of the May 2018 Acquisition and the EQM-RMP Merger because these transactions were between entities under common control. The recast is for the period the acquired businesses were under the common control of EQT, which began on November 13, 2017 as a result of EQT's merger with Rice Energy Inc. (Rice) (the Rice Merger). EQM recorded the assets and liabilities acquired in the May 2018 Acquisition and the EQM-RMP Merger at their carrying amounts to EQT on the effective dates of the transactions. The consolidated financial statements are not necessarily indicative of the actual results of operations if EQM and the assets acquired in the May 2018 Acquisition and the EQM-RMP Merger had been operated together during the pre-acquisition periods.
Due to the seasonal nature of EQM's utility customer contracts, the interim statements for the three and nine months ended September 30, 2018March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018.2019.
EQM does not have any employees. Operational, management and other services for EQM are provided by the directors and officers of the New EQM General Partner and employees of Equitrans Midstream.
For further information, refer to the consolidated financial statements and related footnotes for the year ended December 31, 2017 and2018, as well as "Management's Discussion and Analysis of Financial Condition and Results of Operations," in each case as included in EQM's Current Report on Form 8-K as filed with the SEC on June 12, 2018.Operations" contained therein.
Recently Issued Accounting Standards
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The standard requires an entity to recognize revenue in a manner that depicts the transfer of goods or services to customers at an amount that reflects the consideration the entity expects in exchange for those goods or services. EQM adopted this standard on January 1, 2018 using the modified retrospective method of adoption. Adoption of the ASU did not require an adjustment to the opening balance of equity. EQM does not expect the standard to have a significant effect on its results of operations, liquidity or financial position. EQM implemented processes and controls to ensure new contracts are reviewed for the appropriate accounting treatment and to generate the disclosures required under the new standard in the first quarter of 2018. For the disclosures required by this ASU, see Note C.
In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. The standard primarily affects accounting for equity investments, financial liabilities under the fair value option, the presentation and disclosure requirements for financial instruments and eliminates the cost method of accounting for equity investments. EQM adopted this standard in the first quarter of 2018 with no significant effect on its financial statements or related disclosures.
In February 2016, the FASB issued ASU No. 2016-02, Leases. The standard requires an entityentities to record assets and obligations for contracts currently recognized as operating leases. In July 2018, the FASB also targeted improvements to thisissued ASU in ASU 2018-11. This2018-11, Leases (Topic 842): Targeted Improvements. The update provides entities with an optional transition method whichof adoption that permits an entityentities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. EQM has elected to utilizeUnder the optional transition method.method, comparative financial information and disclosures are not required. The update also provides transition practical expedients. The standard requires disclosures of the nature, maturity and value of an entity's lease liabilities and elections taken by the entity. In March 2019, the FASB issued ASU will be effective for annual2019-01, Leases (Topic 842): Codification Improvements, which, among other things, clarifies interim disclosure requirements in the year of ASU 2016-02 adoption.

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TableEQM adopted ASU 2016-02, ASU 2018-11 and ASU 2019-01 on January 1, 2019 using the optional transition method of Contents


reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with early adoption permitted.adoption. EQM is utilizinguses a lease accounting system to documentmonitor its current population of contracts classified as leases, which will be updated as EQM's lease population changes.contracts. EQM continues to evaluate new businessimplemented processes and related internal controls to review new lease contracts for appropriate accounting treatment in the context of the standards and is assessing and documentingto generate disclosures required under the accounting impacts related tostandards. For the new standard. Althoughdisclosures required by the evaluation is ongoing, EQM expects that the adoption will impact its financial statements as the standard requires recognition on the balance sheet of a right of use asset and corresponding lease liability.standards, see Note 3.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments. This ASUThe standard amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, this ASUstandard eliminates the probable initial recognition threshold in current GAAP, and, in its place, requires an entity to reflectrecognize its current estimate of all expected credit losses. The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope of the standard that have the contractual right to receive cash. The ASUstandard will be effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period. EQM is currently evaluating the effect this standard will have on its financial statements and related disclosures.
In January 2017, the FASB issued ASU 2017-04, Simplifying the Test of Goodwill Impairment. ASU 2017-04 simplifies the quantitative goodwill impairment test requirements by eliminating the requirement to calculate the implied fair value of goodwill. Instead, a company would record an impairment charge based on the excess of a reporting unit’s carrying value over its fair value. The standard’s provisions are to be applied prospectively. EQM adopted this standard in the first quarter of 2018 with no significant effect on its financial statements or related disclosures.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement, Changes to the Disclosure Requirements for Fair Value Measurement, which makes a number of changes to the hierarchy associated with Level 1, 2 and 3 fair value measurements and the related disclosure requirements. This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. EQM is currently evaluating the effect this standard will have on its financial statements and related disclosures but does not expect the adoption of this standard to have a material impacteffect on its financial statements and related disclosures.
In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other: Internal-Use Software, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. EQM early-adopted the standard using the prospective method of adoption on January 1, 2019.
Following the adoption of ASU 2018-15, EQM began capitalizing certain implementation costs related to cloud computing arrangements that are service contracts. The capitalized portion of these costs are included in the property, plant and equipment line on the consolidated balance sheets and will be amortized over the term of EQM's hosting arrangement, which has a fixed term of 7 years. For the three months ended March 31, 2019, EQM did not recognize any amortization expense related to implementation costs on its cloud computing arrangements as such assets were not in use. The costs will be included in the selling, general and administrative expense line on the accompanying statements of consolidated operations when recognized.

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In August 2018, the SEC adopted a final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, that amends certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. The amendments also expanded the disclosure requirements on the analysis of stockholders' equity for interim financial statements, in that registrants must now analyze changes in stockholders’ equity, in the form of reconciliation, for the current and comparative year-to-date periods, with subtotals for each interim period. This final rule was effective on November 5, 2018 and EQM assessed the impact on its consolidated financial statements disclosures to be not significant. EQM adopted the final rule and began applying this disclosure change to its statement of consolidated equity in the first quarter of 2019.
B.2.Acquisitions and MergerMergers
May 2018Bolt-on Acquisition
On April 25, 2018, EQT, RiceMarch 13, 2019, EQM entered into a Purchase and Sale Agreement (the Purchase and Sale Agreement) with North Haven Infrastructure Partners II Buffalo Holdings, LLC (NHIP), an affiliate of Morgan Stanley Infrastructure Partners, pursuant to which EQM acquired from NHIP a 60% Class A interest in Eureka Midstream Holdings, LLC (Eureka Midstream) and a wholly owned subsidiary of EQT, EQM and EQM Gathering100% interest in Hornet Midstream Holdings, LLC (EQM Gathering)(Hornet Midstream) (collectively, the Bolt-on Acquisition) for total consideration of approximately $1.03 billion, composed of approximately $860 million in cash and approximately $170 million in assumed pro-rata debt, subject to certain adjustments set forth in the Purchase and Sale Agreement. Eureka Midstream owns a 190-mile gathering header pipeline system in Ohio and West Virginia that services both dry Utica and wet Marcellus production. Hornet Midstream owns a 15-mile, high-pressure gathering system in West Virginia that connects to the Eureka Midstream system. In connection with the entry into the Purchase and Sale Agreement, EQM deposited $50.0 million with an escrow agent, which is presented in restricted cash on the consolidated balance sheet as of March 31, 2019. The deposit was credited towards the purchase price at the close of the acquisition. The Bolt-on Acquisition closed on April 10, 2019 and was funded through the Private Placement (as defined herein) of Series A Perpetual Convertible Preferred Units representing limited partner interests in EQM that closed concurrently with the Bolt-on Acquisition. See Note 4 for further information on the Private Placement. As of the closing of the Bolt-on Acquisition, Eureka Midstream, LLC (Eureka), a wholly owned subsidiary of Eureka Midstream, had a $400 million credit facility, which is available for general business purposes, including financing maintenance and expansion capital expenditures related to the Eureka system and providing working capital for Eureka’s operations.
Shared Assets Transaction
On March 31, 2019, EQM entered into a Contributionan Assignment and Bill of Sale Agreement(the Assignment and Bill of Sale) with Equitrans Midstream pursuant to which EQM Gathering acquired from EQT all of EQT's interests in ROM, Strike Forcecertain assets and Rice WV in exchangeassumed certain leases that primarily support EQM’s operations for an aggregate of 5,889,282 EQM common units and aggregate cash purchase price of $49.7 million (the initial purchase price), which reflected the net book value of in-service assets and expenditures made for assets not yet in-service and is subject to certain adjustments (collectively, the Shared Assets Transaction). Pursuant to the Assignment and Bill of Sale, EQM may assume an additional facilities lease, and may acquire certain additional assets from Equitrans Midstream for additional cash consideration reflecting the net book value of $1.15in-service assets and expenditures made with respect to assets not yet in-service. The initial purchase price was funded utilizing EQM’s $3 billion plus working capital adjustments. ROM owns a natural gas gathering systemFacility (defined in Note 9). Prior to the Shared Assets Transaction, EQM made quarterly payments to Equitrans Midstream based on fees allocated from Equitrans Midstream for use of in-service assets transferred to EQM in the transaction. In connection with the entry into the Assignment and Bill of Sale, that gathers gas from wells located primarilycertain Omnibus Agreement among Equitrans Midstream, EQM and the New EQM General Partner (as successor to the Former EQM General Partner) was amended and restated in Belmont County, Ohio. Strike Force owns a 75% limited liability company interestorder to, among other things, govern Equitrans Midstream’s use of the acquired assets following their conveyance to EQM and provide for reimbursement of EQM by Equitrans Midstream for expenses incurred by EQM in Strike Force Midstream LLC (Strike Force Midstream). The May 2018 Acquisition closed on May 22, 2018connection with an effective date of May 1, 2018.such use.
EQM-RMP Merger
On April 25, 2018, EQM entered into an Agreement and Plan of Merger (the Merger Agreement) with RMP, Rice Midstream Management LLC, the general partner of RMP (the RMP General Partner), the Former EQM General Partner, EQM Acquisition Sub, LLC, a wholly ownedwholly-owned subsidiary of EQM (Merger Sub), EQM GP Acquisition Sub, LLC, a wholly ownedwholly-owned subsidiary of EQM (GP Merger Sub), and, solely for certain limited purposes set forth therein, EQT. Pursuant to the Merger Agreement, on July 23, 2018, Merger Sub and GP Merger Sub merged with and into RMP and the RMP General Partner, respectively, with RMP and the RMP General Partner surviving as wholly ownedwholly-owned subsidiaries of EQM. Pursuant to the Merger Agreement, each RMP common unit issued and outstanding immediately prior to the effective time of the EQM-RMP Merger was converted into the right to receive 0.3319 EQM common units (the Merger Consideration), the issued and outstanding IDRs of RMP were canceled and each outstanding award of phantom units in respect of RMP common units fully vested and converted into the right to receive the Merger Consideration, less applicable tax withholding, in respect of each RMP common unit subject thereto. The aggregate Merger Consideration consisted of approximately 34 million EQM common units of which

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9,544,530 EQM common units were received by an indirect wholly ownedwholly-owned subsidiary of EQT. As a result of the EQM-RMP Merger, RMP's common units are no longer publicly traded.
Drop-Down Transaction
On April 25, 2018, EQT, Rice Midstream Holdings LLC (Rice Midstream Holdings), a wholly-owned subsidiary of EQT, EQM and EQM Gathering Holdings, LLC (EQM Gathering), a wholly-owned subsidiary of EQM, entered into a Contribution and Sale Agreement pursuant to which EQM Gathering acquired from EQT all of EQT's interests in EQM Olympus, Strike Force and EQM WV in exchange for an aggregate of 5,889,282 EQM common units and aggregate cash consideration of approximately $1.15 billion. EQM Olympus owns a natural gas gathering system that gathers gas from wells located primarily in Belmont County, Ohio. Strike Force owns a 75% limited liability company interest in Strike Force Midstream LLC (Strike Force Midstream). The Drop-Down Transaction closed on May 22, 2018 with an effective date of May 1, 2018.
As a result of the recast associated with the EQM-RMP Merger and the Drop-Down Transaction, EQM recognized approximately $1,384.9 million of goodwill.goodwill, all of which was allocated to two reporting units within the Gathering segment. The goodwill value was based on a valuation performed by EQT as of November 13, 2017 with regard to the Rice Merger. EQT recorded goodwill as the excess of the estimated enterprise value of RMP, ROM,EQM Olympus, Strike Force and RiceEQM WV over the sum of the fair value amounts allocated to the

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assets and liabilities of RMP, ROM,EQM Olympus, Strike Force and RiceEQM WV. Goodwill was attributed to additional growth opportunities, synergies and operating leverage within the Gathering segment. Prior to the recast, EQM had no goodwill.
Following EQT's initial valuation, certain estimates used in the purchase price allocation were updated. The net impact of these measurement period adjustments increased goodwill by approximately $0.9 million. The purchase price allocation was finalized and the measurement period adjustments were recorded as current period adjustments. The following table summarizes the allocation of the fair value of the assets and liabilities of RMP, ROM,EQM Olympus, Strike Force and RiceEQM WV as of November 13, 2017 through pushdown accounting from EQT. The preliminary allocationEQT, as well as certain measurement period adjustments made subsequent to certain assets and/or liabilities may be adjusted by material amounts as EQT continues to finalize the fair value estimates.EQT's initial valuation.
 At November 13, 2017 Goodwill and Purchase Price Allocation
 (Thousands) (Thousands)
Estimated fair value of RMP, ROM, Strike Force and Rice WV (1)
 $4,014,984
Estimated fair value of RMP, EQM Olympus, Strike Force(a) and EQM WV
 $4,014,984
 
 
Estimated Fair Value of Assets Acquired and Liabilities Assumed: 
 
Current assets (2)(b)
 132,459
 132,459
Intangible assets (3)(c)
 623,200
 623,200
Property and equipment, net (4)(d)
 2,265,900
 2,265,900
Other non-current assets 118
 118
Current liabilities (2)(b)
 (116,242) (117,124)
RMP $850 Million Facility (5)(e)
 (266,000) (266,000)
Other non-current liabilities (5)(e)
 (9,323) (9,323)
Total estimated fair value of assets acquired and liabilities assumed 2,630,112
 2,629,230
Goodwill $1,384,872
Goodwill as of November 13, 2017(f)
 1,385,754
Impairment of goodwill (g)
 261,941
Goodwill as of December 31, 2018 $1,123,813
(1)(a)Includes the estimated fair value attributable to noncontrolling interest of $166 million.
(2)(b)The fair value of current assets and current liabilities were assumed to approximate their carrying values.
(3)(c)The identifiable intangible assets for customer relationships were estimated by applying a discounted cash flow approach which was adjusted for customer attrition assumptions and projected market conditions.
(4)(d)The estimated fair value of long-lived property and equipment were determined utilizing estimated replacement cost adjusted for a usage or obsolescence factor.
(5)(e)The estimated fair value of long-term liabilities was determined utilizing observable market inputs where available or estimated based on their then current carrying values.
As a result of the recast, EQM also recognized approximately $623.2 million in intangible assets. These intangible assets were valued by EQT based upon the estimated fair value of the customer contracts as of November 13, 2017. The customer contracts were assigned a useful life of 15 years and are amortized on a straight-line basis. Amortization expense for the three and nine months ended September 30, 2018 was $10.4 million and $31.2 million, respectively. As of September 30, 2018 and December 31, 2017, accumulated amortization was $36.7 million and $5.5 million, respectively. There was no amortization expense recognized for the three and nine months ended September 30, 2017. The estimated annual amortization expense over the next five years is $41.5 million.
As a result of the recast, EQM recognized a liability for AROs related to dismantling, reclaiming and disposing of the water services assets. Based on an estimate of the timing and amount of their settlement, EQM recorded a liability and capitalized a corresponding amount to asset retirement costs. The liability was estimated using the present value of expected future cash flows, adjusted for inflation and discounted at EQM's credit-adjusted, risk-free rate. The current portion of the AROs was recorded in regulatory and other long-term liabilities on the consolidated balance sheets. The following table presents a reconciliation of the AROs for the periods from November 13, 2017 through September 30, 2018.
  Asset Retirement Obligations
  (Thousands)
Balance at November 13, 2017 $9,286
Accretion expense 35
Balance at December 31, 2017 $9,321
Accretion expense 321
Balance at September 30, 2018 $9,642

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(f)Reflected the value of perceived growth opportunities, synergies and operating leverage anticipated through the acquisition and ownership of the acquired gathering assets as of November 13, 2017.
(g)During its annual goodwill assessment for the year ended December 31, 2018, EQM determined that carrying value of the RMP PA Gas Gathering reporting unit, which comprises the Pennsylvania gathering assets acquired in the Rice Merger, was greater than its fair value. As a result, EQM recognized an impairment to goodwill of approximately $261.9 million.
The Gulfport Transaction
On May 1, 2018, pursuant to the Purchase and Sale Agreement dated April 25, 2018, by and among EQM, EQM Gathering, Gulfport Energy Corporation (Gulfport) and an affiliate of Gulfport, EQM Gathering acquired the remaining 25% limited liability company interest in Strike Force Midstream not owned by Strike Force for $175 million (the Gulfport Transaction). As a result, EQM owned 100% of Strike Force Midstream effective as of May 1, 2018.
RMP and the entities part of the Drop-Down Transaction were businesses and the related acquisitions were transactions between entities under common control; therefore, EQM recorded the assets and liabilities of these entities at their carrying amounts to EQT on the date of the respective transactions. The difference between EQT's net carrying amount and the total consideration paid to EQT was recorded as a capital transaction with EQT, which resulted in a reduction in equity. This portion of the consideration was recorded in financing activities in the statements of consolidated cash flows. EQM recast its consolidated financial statements to retrospectively reflect the EQM-RMP Merger and the Drop-Down Transaction for the periods the acquired businesses were under the common control of EQT; however, the consolidated financial statements are not necessarily indicative of the results of operations that would have occurred if EQM had owned the acquired businesses during the periods reported.
C.3. 
Revenue from Contracts with CustomersLeases
As discussed in Note A,1, EQM adopted ASU No. 2014-09, Revenue from Contracts with Customers,2016-02, ASU 2018-11 and ASU 2019-01 on January 1, 20182019 (the Adoption Date) using the modified retrospectiveoptional transition method of adoption.
EQM appliedelected a package of practical expedients that allows an entity to not reassess (i) whether a contract is or contains a lease, (ii) lease classification and (iii) initial direct costs. In addition, EQM elected the following practical expedients: (i) to not reassess certain land easements, (ii) to not apply the recognition requirements under the standard to all openshort-term leases and (iii) to combine and account for lease and nonlease contract components as a lease, which requires the capitalization of fixed nonlease payments on the Adoption Date or lease effective date and the recognition of variable nonlease payments as variable lease expense. Nonlease payments include payments for property taxes and other operating and maintenance expenses incurred by the lessor but payable by EQM in connection with the leasing arrangement.
On the Adoption Date, EQM recorded on its consolidated balance sheet an operating lease right-of-use asset and a corresponding operating lease liability of $2.3 million, reflecting the present value of future lease payments on EQM's facility and compressor lease contracts. The discount rate used to determine present value, referred to as the incremental borrowing rate, was based on the rate of interest that EQM estimated it would have to pay to borrow (on a collateralized-basis over a similar term) an amount equal to the lease payments in a similar economic environment as of the Adoption Date. EQM is required to reassess the incremental borrowing rate for any new and modified lease contracts as of the date of initial application.contract effective date. Adoption of the standard did not require an adjustment to the opening balance of equity and did not materially change EQM's amount or timing of revenues.
For the three and nine months ended September 30, 2018 and 2017, all revenues recognized on EQM's statements of consolidated operations are from contracts with customers.retained earnings. As of September 30, 2018the Adoption Date and DecemberMarch 31, 2017, all receivables recorded2019, EQM had no lease contracts classified as financing leases and was neither a lessor nor party to a subleasing arrangement.
As discussed in Note 2, on EQM's consolidated balance sheets represent performance obligationsMarch 31, 2019, Equitrans Midstream assigned to EQM two lease agreements that have been satisfiedsupport EQM operations (the Shared Leases Assignment), one of which provides rights to a facility and for which an unconditional rightthe other to consideration exists.
Gathering, Transmission and Storage Service Contracts. EQM provides gathering, transmission and storage services in two manners: firm service and interruptible service. Firm service contracts are typically long-term and include firm reservation fees, which are fixed, monthly charges for the guaranteed reservation of pipeline or storage capacity. Volumetric-based fees can also be charged under firm contracts for each firm volume actually transported, gathered or stored as well as for volumes transported, gathered or stored in excessa compressor station. As a result of the firm contracted volume. Interruptible service contracts include volumetric-based fees, which are charges for the volumeShared Leases Assignment, EQM recorded $33.0 million of gas gathered, transported or storedright-of-use assets and generally do not guarantee access to the pipeline or storage facility. These contracts can be short or long-term. Firm and interruptible contracts are billed at the end of each calendar month, with payment typically due within 21 days.corresponding operating lease liabilities.
Under a firm contract, EQM has a stand-ready obligation to provide the service over the life of the contract. The performance obligation for firm reservation fee revenue is satisfied over time as the pipeline capacity is made available to the customer. As such, EQM recognizes firm reservation fee revenue evenly over the contract period, using a time-elapsed output method to measure progress. The performance obligation for volumetric-based fee revenue is generally satisfied upon EQM's monthly billing to the customer for volumes gathered, transported or stored during the month. The amount billed corresponds directly to the value of EQM's performance to date as the customer obtains value as each volume is gathered, transported or stored.
Certain of EQM's gas gathering agreements are structured with minimum volume commitments (MVCs), which specify minimum quantities for which a customer will be charged regardless of quantities gathered under the contract. Revenue is recognized for MVCs when the performance obligation has been met, which is the earlier of when the gas is gathered or when it is remote that the producer will be able to meet its MVC.
Water Service Contracts. EQM's water service revenues represent fees charged by EQM for the delivery of fresh water to a customer at a specified delivery point and for the collection and recycling or disposal of flowback and produced water. All of EQM’s water service revenues are generated pursuant to variable price per volume contracts with customers. For fresh water service contracts, the only performance obligation in each contract is for EQM to provide water (usually a minimum daily volume of water) to the customer at a designated delivery point. For flowback and produced water, the performance obligation is collection and disposition of the water which typically occur within the same day. For all water service arrangements, the customer is typically invoiced on a monthly basis with payment due 21 days after the receipt of the invoice.

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Summary of Disaggregated Revenues. The tables below provide disaggregated revenue information by EQM business segment.
  Three Months Ended September 30, 2018
  Gathering Transmission Water Total
  (Thousands)
Firm reservation fee revenues $112,598
 $82,669
 $—
 $195,267
Volumetric based fee revenues:        
Usage fees under firm contracts (1)
 8,661
 5,331
 —
 13,992
Usage fees under interruptible contracts (2)
 131,602
 1,350
 —
 132,952
Total volumetric based fee revenues 140,263
 6,681
 —
 146,944
Water service revenues —
 —
 22,373
 22,373
Total operating revenues $252,861
 $89,350
 $22,373
 $364,584
         
  Nine Months Ended September 30, 2018
  Gathering Transmission Water Total
  (Thousands)
Firm reservation fee revenues $334,233
 $262,666
 $—
 $596,899
Volumetric based fee revenues:        
Usage fees under firm contracts (1)
 30,725
 13,981
 —
 44,706
Usage fees under interruptible contracts (2)
 366,482
 8,782
 —
 375,264
Total volumetric based fee revenues 397,207
 22,763
 —
 419,970
Water service revenues —
 —
 93,438
 93,438
Total operating revenues $731,440
 $285,429
 $93,438
 $1,110,307
(1)Includes fees on volumes gathered and transported in excess of firm contracted capacity as well as usage fees and fees on all volumes transported under firm contracts.
(2)
Includes volumes from contracts under which EQM has agreed to hold capacity available without charging a capacity reservation fee.
Summary of Remaining Performance Obligations. The following table summarizes the transaction price allocated to EQM's remaining performance obligations under all contracts with firm reservation fees and MVCs as of September 30, 2018.
  
2018 (1)
 2019 2020 2021 2022 Thereafter Total
 (Thousands)
Gathering firm reservation fees $113,018
 $476,270
 $552,197
 $562,196
 $562,196
 $2,834,111
 $5,099,988
Gathering revenues supported by MVCs —
 65,700
 71,370
 71,175
 71,175
 136,875
 416,295
Transmission firm reservation fees 94,077
 346,893
 344,328
 339,588
 334,522
 2,477,808
 3,937,216
Total $207,095
 $888,863
 $967,895
 $972,959
 $967,893
 $5,448,794
 $9,453,499
(1)October 1 through December 31
Based on total projected contractual revenues, including projected contractual revenues from additional pipeline capacity that will result from expansion projects that are not yet fully constructed, EQM's firm gathering contracts and firm transmission and storage contracts had weighted average remaining terms of approximately 8 and 15 years, respectively, as of December 31, 2017.

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D.Equity and Net Income per Limited Partner Unit
The following table summarizes EQM's limited partner common units and general partner units issued from January 1, 2018 through September 30, 2018. There were no issuances in 2017.
 Limited Partner Common Units General Partner Units Total
Balance at January 1, 201880,581,758
 1,443,015
 82,024,773
Common units issued (1)
9,608
 —
 9,608
May 2018 Acquisition consideration5,889,282
 —
 5,889,282
Common units issued with the EQM-RMP Merger33,975,777
 —
 33,975,777
Balance at September 30, 2018120,456,425
 1,443,015
 121,899,440
(1)Units issued upon a resignation from the EQM General Partner's Board of Directors in February 2018.
As of September 30, 2018, EQGP owned 21,811,643 EQM common units, representing a 17.9% limited partner interest, 1,443,015 EQM general partner units, representing a 1.2% general partner interest, and all of the IDRs in EQM. As of September 30, 2018, EQT owned 15,433,812 EQM common units, representing a 12.7% limited partner interest in EQM, 100% of the non-economic general partner interest in EQGP and a 91.3% limited partner interest in EQGP.
Net Income per Limited Partner Unit. Net income attributable to the May 2018 Acquisition and the EQM-RMP Merger for the periods prior to May 1, 2018 and July 23, 2018, respectively, was not allocated to the limited partners for purposes of calculating net income per limited partner unit as these pre-acquisition amounts were not available to the EQM unitholders. The weighted average phantom unit awards included in the calculation of basic weighted average limited partner units outstanding was 17,816 and 21,298operating lease cost for the three months ended September 30, 2018 and 2017, respectively, and 19,699 and 20,757 for the nine months ended September 30, 2018 and 2017, respectively.
E.Financial Information by Business Segment
Prior to the EQM-RMP Merger, all of EQM's operating activities were conducted through two business segments: Gathering and Transmission. Following the EQM-RMP Merger, EQM adjusted its internal reporting structure to incorporate the newly acquired assets consistent with how EQM's chief operating decision maker reviews its business operations. EQM now conducts its business through three business segments: Gathering, Transmission and Water. Gathering primarily includes high pressure gathering lines and the FERC-regulated low pressure gathering system. Transmission includes EQM's FERC-regulated interstate pipeline and storage business. Water includes water pipelines, impoundment facilities, pumping stations, take point facilities and measurement facilities. EQM has recast the corresponding segment information for the period in which RMP was under the common control of EQT, which began on November 13, 2017.March 31, 2019.

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 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2018 2017 2018 2017
 (Thousands)
Revenues from external customers (including affiliates): 
  
  
  
Gathering$252,861
 $116,522
 $731,440
 $330,996
Transmission89,350
 89,771
 285,429
 272,184
Water22,373
 —
 93,438
 —
Total operating revenues$364,584
 $206,293
 $1,110,307
 $603,180
        
Operating income (loss): 
  
  
  
Gathering$177,902
 $85,932
 $510,755
 $243,061
Transmission58,691
 59,770
 198,784
 189,237
Water(3,093) —
 35,627
 —
Total operating income$233,500
 $145,702
 $745,166
 $432,298
        
Reconciliation of operating income to net income:   
  
  
Equity income (1)
16,087
 6,025
 35,836
 15,413
Other income1,345
 637
 3,193
 3,576
Net interest expense41,005
 9,426
 76,740
 26,014
Net income$209,927

$142,938

$707,455

$425,273
 Three Months Ended March 31, 2019
 (Thousands)
Operating lease cost$1,297
Short-term lease cost368
Variable lease cost8
Total lease cost$1,673
Operating lease expense related to EQM's compressor lease contracts and facility lease contracts is reported in operating and maintenance expense and selling, general and administrative expense, respectively, on EQM's statement of consolidated operations.
The current and noncurrent portions of the operating lease right-of-use assets are reported in other current assets and other assets, respectively, and the current and noncurrent portions of the operating lease liabilities are reported in accrued liabilities and regulatory and other long-term liabilities, respectively. As of March 31, 2019, the operating lease right-of-use assets and operating lease liabilities had balances of $34.8 million and $34.9 million, respectively, of which $0.3 million and $2.8 million, respectively, were classified as current. As of March 31, 2019, the weighted average remaining lease term was 11 years and the weighted average discount rate was 6.0%.
Schedule of Operating Lease Liability Maturities. The following table summarizes undiscounted cash flows owed by EQM to lessors pursuant to contractual agreements in effect as of March 31, 2019 and related imputed interest. The majority of EQM's lease agreements have multiple renewal periods at EQM's option; however, because none of the renewal periods are reasonably assured to be exercised, the associated operating lease payments have not been included in the table below.
 March 31, 2019
 (Thousands)
2019$3,702
20204,218
20214,070
20224,117
20233,841
20243,889
Thereafter24,729
Total48,566
Less: imputed interest13,671
Present value of operating lease liability$34,895
(1)4.Equity income is included in the Transmission segment.
The following table summarizes changes in EQM's common units and Class B units, both representing limited partner interests in EQM, and general partner units during the year ended December 31, 2018 and from January 1, 2019 through March 31, 2019.
 September 30, 
 2018		 December 31, 
 2017
 (Thousands)
Segment assets: 
  
Gathering$6,131,380
 $5,656,094
Transmission (1)
2,833,519
 1,947,566
Water177,126
 208,273
Total operating segments9,142,025
 7,811,933
Headquarters, including cash124,166
 186,902
Total assets$9,266,191
 $7,998,835
(1)
The equity investment in the MVP Joint Venture was included in the headquarters segment prior to June 30, 2018. As of June 30, 2018, the investment in the MVP Joint Venture was included in the Transmission segment and the amount at December 31, 2017 has been recast to conform with this presentation.
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2018 2017 2018 2017
 (Thousands)
Depreciation: 
  
  
  
Gathering$25,359
 $9,983
 $72,309
 $28,398
Transmission12,357
 12,261
 37,228
 35,793
Water5,851
 —
 17,420
 —
Total$43,567
 $22,244
 $126,957
 $64,191
        
Expenditures for segment assets:       
Gathering$194,477
 $48,182
 $515,072
 $150,728
Transmission37,626
 22,312
 84,517
 73,679
Water7,981
 —
 17,358
 —
Total (1)
$240,084
 $70,494
 $616,947
 $224,407
 Limited Partner Interests    
  Common Units Class B Units General Partner Units Total
Balance at January 1, 201880,581,758
 —
 1,443,015
 82,024,773
Common units issued (1)
10,821
 —
 —
 10,821
Drop-Down Transaction consideration5,889,282
 —
 —
 5,889,282
Common units issued in the EQM-RMP Merger33,975,777
 —
 —
 33,975,777
Balance at December 31, 2018120,457,638
 —
 1,443,015
 121,900,653
Unit cancellation(8) —
 —
 (8)
EQM IDR Transaction (2)
80,000,000
 7,000,000
 (1,443,015) 85,556,985
Balance at March 31, 2019200,457,630
 7,000,000
 —
 207,457,630

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(1)Units issued upon the resignation of a member of the Board of Directors of EQM's general partner.
(2)In exchange for the cancellation of the EQM IDRs, EQM issued 87,000,000 EQM common units (the Exchange Consideration) to the Former EQM General Partner. At the effective time of the EQM IDR Merger, (i) the Exchange Consideration held by the Former EQM General Partner was canceled, (ii) 80,000,000 EQM common units and 7,000,000 Class B units were issued on a pro rata basis to certain affiliates of Equitrans Midstream, and (iii) 21,811,643 EQM common units held by EQGP were canceled and 21,811,643 EQM common units were issued pro rata to certain affiliates of Equitrans midstream.
On February 22, 2019, the EQM IDRs were exchanged and canceled in the EQM IDR Transaction. After giving effect to the EQM IDR Transaction, including the issuance of the Class B units, Equitrans Gathering Holdings, LLC (Equitrans Gathering Holdings), EQM GP Corporation (EQM GP Corp) and Equitrans Midstream Holdings, LLC (EMH), each a wholly-owned subsidiary of Equitrans Midstream, held 89,505,616, 89,536 and 27,650,303 EQM common units, respectively, representing an aggregate 56.5% limited partner interest in EQM as of March 31, 2019. Additionally, Equitrans Gathering Holdings, EQM GP Corp and EMH held 6,153,907, 6,155 and 839,938 EQM Class B units, respectively, representing an aggregate 3.4% limited partner interest in EQM as of March 31, 2019. Following completion of the EQM IDR Transaction and as of March 31, 2019, Equitrans Midstream owned, directly or indirectly, 117,245,455 EQM common units and 7,000,000 Class B units (collectively representing a 59.9% limited partner interest in EQM) and the entire non-economic general partner interest in EQM, while the public owned a 40.1% limited partner interest in EQM. Following the completion of the Private Placement (defined below), certain investors owned an aggregate of 24.6 million Series A Preferred Units (defined below) and, taking into account such Series A Preferred Units issued in the Private Placement on an as-converted basis, as of March 31, 2019, Equitrans Midstream would have owned, directly or indirectly, a 53.5% limited partner interest in EQM, as well as the non-economic general partner interest in EQM.
Class B Units
As discussed above and in Note 1, in February 2019, EQM issued 7,000,000 Class B units representing a new class of limited partner interests in EQM as partial consideration for the EQM IDR Transaction. The Class B units are substantially similar in all respects to EQM's common units, except that the Class B units are not entitled to receive distributions of available cash until the applicable Class B unit conversion date (or, if earlier, a change of control). The Class B units are divided into three tranches, with the first tranche of 2,500,000 Class B units becoming convertible at the holder’s option into EQM common units on April 1, 2021, the second tranche of 2,500,000 Class B units becoming convertible at the holder’s option into EQM common units on April 1, 2022, and the third tranche of 2,000,000 Class B units becoming convertible at the holder’s option on April 1, 2023 (each, a Class B unit conversion date). Additionally, the Class B units will become convertible at the holder’s option into EQM common units immediately before a change of control of EQM. After the applicable Class B unit conversion date (or, if earlier, a change of control), whether or not such Class B units have been converted into EQM common units, the Class B units will participate pro rata with the EQM common units in distributions of available cash.
The holders of Class B units vote together with the holders of EQM common units as a single class, except that Class B units owned by the general partner of EQM and its affiliates are excluded from voting if EQM common units owned by such parties are excluded from voting. Holders of Class B units are entitled to vote as a separate class on any matter that adversely affects the rights or preferences of the Class B units in relation to other classes of EQM partnership interests in any material respect or as required by law.
Series A Preferred Units
On March 13, 2019, EQM entered into a Convertible Preferred Unit Purchase Agreement (inclusive of certain Joinder Agreements entered into on March 18, 2019, the Preferred Unit Purchase Agreement) with certain investors to issue and sell in a private placement (the Private Placement) an aggregate of 24,605,291 Series A Perpetual Convertible Preferred Units (Series A Preferred Units) representing limited partner interests in EQM for a cash purchase price of $48.77 per Series A Preferred Unit, resulting in total gross proceeds of approximately $1.2 billion. The net proceeds from the Private Placement were used in part to fund the purchase price in the Bolt-on Acquisition and to pay certain fees and expenses related to the Bolt-on Acquisition, and the remainder is expected to be used for general partnership purposes. The Private Placement closed concurrently with the closing of the Bolt-on Acquisition on April 10, 2019.
The Series A Preferred Units rank senior to all common units and Class B units representing limited partner interests in EQM with respect to distribution rights and rights upon liquidation. The Series A Preferred Units will vote on an as-converted basis with the EQM common units and Class B units and will have certain other class voting rights with respect to any amendment to EQM's partnership agreement or its certificate of limited partnership that would be adverse (other than in a de minimis manner) to any of the rights, preferences or privileges of the Series A Preferred Units.

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The holders of the Series A Preferred Units are entitled to receive cumulative quarterly distributions at a rate of $1.0364 per Series A Preferred Unit for the first twenty distribution periods, and thereafter the quarterly distributions on the Series A Preferred Units will be an amount per Series A Preferred Unit for such quarter equal to (i) the Series A Preferred Unit purchase price of $48.77 per such unit, multiplied by (ii) a percentage equal to the sum of (A) the greater of (x) the 3-month LIBOR as of the second London banking day prior to the beginning of the applicable quarter and (y) 2.59%, and (B) 6.90%, multiplied by (iii) 25%. EQM will not be entitled to pay any distributions on any junior securities, including any EQM common units, prior to paying the quarterly distributions payable to the holders of Series A Preferred Units, including any previously accrued and unpaid distributions.
Each holder of the Series A Preferred Units may elect to convert all or any portion of the Series A Preferred Units owned by it into EQM common units initially on a one-for-one basis, subject to customary anti-dilution adjustments and an adjustment for any distributions that have accrued but not been paid when due and partial period distributions, at any time (but not more often than once per fiscal quarter) after April 10, 2021 (or earlier liquidation, dissolution or winding up of EQM), provided that any conversion is for at least $30 million (calculated based on the closing price of the common units on the trading day preceding notice of conversion) or such lesser amount if such conversion relates to all of a holder’s remaining Series A Preferred Units.
EQM may elect to convert all or any portion of the Series A Preferred Units into EQM common units at any time (but not more often than once per quarter) after April 10, 2021 if (i) the common units are listed for, or admitted to, trading on a national securities exchange, (ii) the closing price per common unit on the national securities exchange on which the common units are listed for, or admitted to, trading exceeds 140% of the Series A Preferred Unit purchase price of $48.77 per such unit for the 20 consecutive trading days immediately preceding notice of the conversion, (iii) the average daily trading volume of the common units on the national securities exchange on which the common units are listed for, or admitted to, trading exceeds 500,000 common units for the 20 consecutive trading days immediately preceding notice of the conversion, (iv) EQM has an effective registration statement on file with the SEC covering resales of the common units to be received by such holders upon any such conversion and (v) EQM has paid all accrued quarterly distributions in cash to the holders.
5.Financial Information by Business Segment
EQM reports its operations in three segments that reflect its three lines of business of Gathering, Transmission and Water. Gathering includes EQM's high-pressure gathering lines and FERC-regulated low-pressure gathering line; Transmission includes EQM's FERC-regulated interstate pipeline and storage system; and Water consists of EQM's water pipelines, impoundment facilities, pumping stations, take point facilities and measurement facilities.
 Three Months Ended 
 March 31,
 2019 2018
 (Thousands)
Revenues from external customers (including related parties): 
  
Gathering$261,881
 $237,390
Transmission109,859
 106,934
Water18,042
 26,702
Total operating revenues$389,782
 $371,026
    
Operating income: 
  
Gathering$182,078
 $171,035
Transmission84,750
 79,451
Water1,186
 15,312
Total operating income$268,014
 $265,798
    
Reconciliation of operating income to net income:   
Equity income (a)
31,063
 8,811
Other income2,210
 904
Net interest expense49,356
 12,670
Net income$251,931

$262,843
(a)Equity income is included in the Transmission segment.

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 March 31, 
 2019		 December 31, 
 2018
 (Thousands)
Segment assets: 
  
Gathering$6,234,581
 $6,011,654
Transmission (a)
3,243,578
 3,066,659
Water242,334
 237,602
Total operating segments9,720,493
 9,315,915
Headquarters, including cash168,092
 140,206
Total assets$9,888,585
 $9,456,121
(a)The equity investment in the MVP Joint Venture is included in the Transmission segment.
 Three Months Ended 
 March 31,
 2019 2018
 (Thousands)
Depreciation: 
  
Gathering$28,116
 $23,068
Transmission12,533
 12,441
Water6,416
 5,771
Total$47,065
 $41,280
    
Expenditures for segment assets:   
Gathering(1)
$207,717
 $134,138
Transmission18,762
 18,929
Water9,175
 2,375
Total(2)
$235,654
 $155,442
(1)Includes approximately $49.7 million related to non-operating assets acquired from Equitrans Midstream in the Shared Assets Transaction that primarily support EQM's gathering activities.
(2)
EQM accrues capital expenditures when work has been completed but the associated bills have not yet been paid. These accrued amounts are excluded from capital expenditures in the statements of consolidated cash flows until they are paid in a subsequent period.paid. Accrued capital expenditures were approximately $91.3 million, $84.6$137.8 million and $90.7$108.9 million at September 30, 2018, June 30, 2018March 31, 2019 and December 31, 2017,2018, respectively. Accrued capital expenditures were approximately $26.5$75.5 million, and $31.2 million and $26.790.7 million at September 30, 2017, June 30, 2017March 31, 2018 and December 31, 2016,2017, respectively.
F.6.Revenue from Contracts with Customers
For the three months ended March 31, 2019 and 2018, all revenues recognized on EQM's statements of consolidated operations are from contracts with customers. As of March 31, 2019 and December 31, 2018, all receivables recorded on EQM's consolidated balance sheets represent performance obligations that have been satisfied and for which an unconditional right to consideration exists.
Summary of disaggregated revenues. The tables below provide disaggregated revenue information by business segment.

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  Three Months Ended March 31, 2019
  Gathering Transmission Water Total
  (Thousands)
Firm reservation fee revenues $128,959
 $99,224
 $—
 $228,183
Volumetric-based fee revenues 132,922
 10,635
 —
 143,557
Water services revenues —
 —
 18,042
 18,042
Total operating revenues $261,881
 $109,859
 $18,042
 $389,782
         
  Three Months Ended March 31, 2018
  Gathering Transmission Water Total
  (Thousands)
Firm reservation fee revenues $109,933
 $97,775
 $—
 $207,708
Volumetric-based fee revenues 127,457
 9,159
 —
 136,616
Water services revenues —
 —
 26,702
 26,702
Total operating revenues $237,390
 $106,934
 $26,702
 $371,026
Summary of Remaining Performance Obligations. The following table summarizes the transaction price allocated to EQM's remaining performance obligations under all contracts with firm reservation fees and MVCs as of March 31, 2019.
  
2019(a)
 2020 2021 2022 2023 Thereafter Total
 (Thousands)
Gathering firm reservation fees $353,984
 $563,215
 $573,214
 $573,214
 $573,214
 $2,312,931
 $4,949,772
Gathering revenues supported by MVCs 55,503
 74,617
 74,413
 74,413
 74,413
 68,689
 422,048
Transmission firm reservation fees 283,230
 345,456
 340,937
 335,850
 295,947
 2,178,142
 3,779,562
Total $692,717
 $983,288
 $988,564
 $983,477
 $943,574
 $4,559,762
 $9,151,382
(a)April 1, 2019 through December 31, 2019
Based on total projected contractual revenues, including projected contractual revenues from future capacity expected from expansion projects that are not yet fully constructed for which EQM has executed firm contracts, EQM's firm gathering contracts and firm transmission and storage contracts had weighted average remaining terms of approximately 11 years and 15 years, respectively, as of March 31, 2019.
7.Related Party Transactions
In the ordinary course of business, EQM engages in transactions with EQT and its affiliates including, but not limited to, gas gathering agreements, transportation service and precedent agreements, storage agreements and water services agreements. Pursuant to an omnibus agreement (the EQMETRN Omnibus Agreement), EQTEquitrans Midstream performs centralized corporate, general and administrative services for EQM. In exchange, EQM reimburses EQTEquitrans Midstream for the expenses incurred by EQTEquitrans Midstream in providing these services. The EQMIn connection with the entry into the Assignment and Bill of Sale, the ETRN Omnibus Agreement also provideswas amended and restated, to, among other things, govern Equitrans Midstream's use, and payment for certain indemnification obligations between EQM and EQT.such use, of the acquired assets following their conveyance to EQM. Pursuant to a secondment agreement, employees of EQTEquitrans Midstream and its affiliates may be seconded to EQM to provide operating and other services with respect to EQM's business under the direction, supervision and control of EQM. EQM reimburses EQTEquitrans Midstream and its affiliates for the services provided by the seconded employees. The expenses for which EQM reimburses EQTEquitrans Midstream and its affiliates may not necessarily reflect the actual expenses that EQM would incur on a stand-alone basis. EQM is unable to estimate what those expenses would be on a stand-alone basis.
In connection with the completionSeparation, Equitrans Midstream assumed certain obligations from EQT to indemnify and reimburse EQM.
As of March 31, 2019, EQT remained a related party following the Rice Merger, RMP,Separation due to its 19.9% ownership interest in Equitrans Midstream. In the ordinary course of business, EQM engaged, and continues to engage, in transactions with EQT and otherits affiliates, entered into an amendedincluding, but not limited to and restated omnibus agreement (the Amended RMP Omnibus Agreement). Pursuant to the Amended RMP Omnibus Agreement, EQT performed centralized corporate generalas applicable, gathering agreements, transportation service and administrative services for RMP. In exchange, RMP reimbursed EQT for the expenses incurred by EQT in providing these services. Following the completion of the EQM-RMP Merger, RMP reimburses EQT for the expenses incurred by EQT providing services to RMPprecedent agreements, storage agreements and its subsidiaries under the EQM Omnibus Agreement.  The Amended RMP Omnibus Agreement continues in existence for purposes of certain indemnification obligations that survived the merger.water service agreements.
G.8.Investment in Unconsolidated Entity
The MVP Joint Venture is constructing the Mountain Valley Pipeline (MVP), an estimated 300-mile natural gas interstate pipeline spanningthat will span from northern West Virginia to southern Virginia. EQM is the operator of the MVP and owned a 45.5% interest in the MVP Joint Ventureproject as of September 30, 2018.March 31, 2019. The MVP Joint Venture is a variable interest entity because it has insufficient equity to finance its activities during the construction stage of the project. EQM is not the primary beneficiary of the MVP Joint

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Venture because it does not have the power to direct the activities ofthat most significantly affect the MVP Joint Venture that most significantly impact itsVenture's economic performance. Certain business decisions, such as decisions to make distributions of cash, require the approval of owners holding morea greater than a 66 2/3% ownership interest in the MVP Joint Ventureapproval, and no one member owns more than a 66 2/3% interest. The MVP Joint Venture is an equity method investment for accounting purposes as EQM has the ability to exercise significant influence over operating and financial policies of the MVP Joint Venture.
In April 2018, the MVP Joint Venture announced the MVP Southgate project, a proposed 70-mile interstate pipeline that will extend from the MVP at Pittsylvania County, Virginia to new delivery points in Rockingham and Alamance Counties, North Carolina. As of September 30, 2018,March 31, 2019, EQM had a 32.7%47.2% ownership interest in the MVP Southgate project and will operate the pipeline. Subject to approval by the FERC, the MVP Southgate project has a targeted in-service date of the fourth quarter of 2020.
In September 2018,March 2019, the MVP Joint Venture issued a capital call notice for the funding of the MVP project to MVP Holdco, LLC (MVP Holdco), a direct, wholly ownedwholly-owned subsidiary of EQM, for $456.0$149.8 million, of which $175.2$25.5 million was paid as of October 2018, and $280.8$124.3 million is expected to be paid in the fourth quarter of 2018.May 2019 and June 2019, respectively. In addition, in September 2018,March 2019, the MVP Joint Venture issued a capital call notice to MVP Holdco for $7.7 million forthe funding of the MVP Southgate project thatto MVP Holdco for $6.6 million, of which $0.8 million was paid in April 2019, and $1.2 million and $4.6 million is expected to be paid in the fourth quarter of 2018.May 2019 and June 2019, respectively. The capital contribution payables have beenpayable and the corresponding increase to the investment balance are reflected on the consolidated balance sheet as of September 30, 2018 with corresponding increasesMarch 31, 2019.
The interests in MVP and MVP Southgate are equity method investments for accounting purposes because EQM has the ability to EQM's investment inexercise significant influence over the MVP Joint Venture.Venture's operating and financial policies. Accordingly, EQM records adjustments to the investment balance for contributions to or distributions from the MVP Joint Venture and for EQM's pro-rata share of MVP Joint Venture earnings.
Equity income, which is primarily related to EQM's portionpro-rata share of the MVP Joint Venture's AFUDC on the construction of the MVP.MVP, is reported in equity income in EQM's statements of consolidated operations.
As of September 30, 2018,Pursuant to the MVP Joint Venture's limited liability company agreement, EQM had issuedis obligated to issue a $91 million performance guarantee in favor of the MVP Joint Venture. The guarantee providesVenture to provide performance assurances of MVP Holdco's obligations to fund its proportionate share of the construction budget for the MVP project. In January 2019, EQM issued a performance guarantee in an amount equal to 33% of EQM's proportionate share of the construction budget.budget for the MVP project, which was $261 million at the time of issuance. The amount of the performance guarantee will decrease based on the capital contributions made by MVP Holdco to the MVP Joint Venture. As of September 30, 2018,March 31, 2019, the performance guarantee remained at $261 million.
In addition, in February 2019, EQM issued a performance guarantee of $14 million in favor of the MVP Joint Venture for the MVP Southgate project. Upon the FERC's initial release to begin construction of the MVP Southgate project, EQM's current MVP Southgate performance guarantee will be terminated, and EQM will be obligated to issue a new guarantee in an amount equal to 33% of EQM's proportionate share of the remaining capital obligations for the MVP Southgate project.
As of March 31, 2019, EQM's maximum financial statement exposure related to the MVP Joint Venture was approximately $1,391$1,792 million, which consists of the investment in unconsolidated entity balance on the consolidated balance sheet as of September 30, 2018March 31, 2019 and amounts that could have become due under EQM's performance guaranteeguarantees as of that date.

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The following tables summarize the unaudited condensed financial statements forof the MVP Joint Venture.
Condensed Consolidated Balance Sheets
September 30, 
 2018		 December 31, 
 2017		March 31, 
 2019		 December 31, 
 2018
(Thousands)(Thousands)
Current assets$1,260,789
 $330,271
$696,893
 $687,657
Noncurrent assets2,330,467
 747,728
Non-current assets3,526,691
 3,223,220
Total assets$3,591,256
 $1,077,999
$4,223,584
 $3,910,877
      
Current liabilities$726,528
 $65,811
$571,907
 $617,355
Non-current liabilities2,192
 —
Equity2,864,728
 1,012,188
3,649,485
 3,293,522
Total liabilities and equity$3,591,256
 $1,077,999
$4,223,584
 $3,910,877
Condensed Statements of Consolidated Operations

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Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,		Three Months Ended 
 March 31,
2018 2017 2018 20172019 2018
(Thousands)(Thousands)
Environmental remediation reserve$(2,192) $—
Other income2,913
 534
Net interest income$11,958
 $3,227
 $25,873
 $8,205
20,235
 5,649
AFUDC - equity23,417
 10,055
 52,906
 25,710
47,216
 13,182
Net income$35,375
 $13,282
 $78,779
 $33,915
$68,172
 $19,365
H.Debt
9.    Debt
$13 Billion Facility. On October 31, 2018, EQM has aamended and restated its credit facility to increase the borrowing capacity from $1 billion credit facility that expires in July 2022.to $3 billion and extend the term to October 2023 (the $3 Billion Facility). The $1$3 Billion Facility is available for general partnership purposes, including to purchase assets, and to fund working capital requirements and capital expenditures, to purchase assets, to pay distributions and repurchase unitsunits. Subject to satisfaction of certain conditions, the $3 Billion Facility has an accordion feature that allows EQM to increase the available borrowings under the facility by up to an additional $750 million. The $3 Billion Facility has a sublimit of up to $250 million for same-day swing line advances and a sublimit of up to $400 million for general partnership purposes (including purchasing assets from EQTletters of credit. In addition, EQM has the ability to request that one or more lenders make available term loans under the $3 Billion Facility, subject to the satisfaction of certain conditions. Such term loans would be secured by cash and other third parties).qualifying investment grade securities. EQM's $1obligations under the revolving portion of the $3 Billion Facility are unsecured.
EQM's $3 Billion Facility contains various provisionsnegative covenants that, if violated, could result in terminationamong other things, limit restricted payments, the incurrence of debt, dispositions, mergers and fundamental changes, and transactions with affiliates. In addition, the credit facility, require early payment of amounts outstanding or similar actions. The most significant covenants and$3 billion Facility contains events of default relate to maintenance of a permitted leverage ratio, limitations on transactions with affiliates, limitations on restricted payments,such as insolvency, events, nonpayment of scheduled principal or interest payments, acceleration of and certain other defaults under other financial obligations, and change of control provisions.and cross-default related to the acceleration or default of certain other financial obligations. Under the $1$3 Billion Facility, EQM is required to maintain a consolidated leverage ratio of not more than 5.00 to 1.00 (or not more than 5.50 to 1.00 for certain measurement periods following the consummation of certain acquisitions).
As of March 31, 2019, EQM had $22 million inapproximately $1.1 billion of borrowings outstanding and $1 million of letters of credit outstanding under its credit facility asthe $3 Billion Facility. As of September 30, 2018.December 31, 2018, EQM had $180approximately $625 million inof borrowings outstanding and no$1 million of letters of credit outstanding under its credit facility as of December 31, 2017.the $3 Billion Facility. During the three and nine months ended September 30,March 31, 2019 and 2018, the maximum amount of EQM's outstanding borrowings under the credit facility$3 Billion Facility at any time was $74 million$1.1 billion and $420 million, respectively, and the average daily balance was approximately $22$942 million and $147$301 million, respectively. EQM incurred interest at weighted average annual interest rates of approximately 3.7%3.9% and 3.2%3.0% for the three and nine months ended September 30,March 31, 2019 and 2018, respectively. During the three and nine months ended September 30, 2017, the maximum amount of EQM's outstanding borrowings under the credit facility at any time was $177 million and the average daily balances were approximately $95 million and $32 million, respectively. Interest was incurred at a weighted average annual interest rate of approximately 2.7% for the three and nine months ended September 30, 2017. Prior to the proposed separation of EQT's production and midstream businesses (the Separation), EQM intends to increase its borrowing capacity from $1 billion up to $3 billion.
364-Day Facility. EQM has a $500 million, 364-day, uncommitted revolving loan agreement with EQT. Interest accrues on outstanding borrowings at an interest rate equal to the rate then applicable to similar loans under the $1 Billion Facility, or a successor revolving credit facility, less the sum of (i) the then applicable commitment fee under the $1 Billion Facility and (ii) 10 basis points.
EQM had no borrowings outstanding on the 364-Day Facility as of September 30, 2018 and December 31, 2017. There were no borrowings outstanding at any time during the three and nine months ended September 30, 2018. During the three and nine months ended September 30, 2017, the maximum amount of EQM's outstanding borrowings under the credit facility at any

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time was $40 million and $100 million, respectively, and the average daily balances were approximately $11 million and $30 million, respectively. EQM incurred interest at weighted average annual interest rates of approximately 2.4% and 2.2% for the three and nine months ended September 30, 2017, respectively. EQM expects EQT to terminate the 364-Day Facility at or prior to the Separation.
EQM Term Loan Facility. On April 25, 2018, EQM entered into a $2.5 billion unsecured multi-draw 364-day term loan facility with a syndicate of lenders.lenders (the EQM Term Loan Facility). The EQM Term Loan Facility was used to fund the cash consideration for the May 2018 Acquisition,Drop-Down Transaction, to repay borrowings under EQM's $1 Billion Facilitythen-existing revolving credit facility and for other general partnership purposes. DuringIn connection with EQM's issuance of the second quarter2018 Senior Notes (defined below), on June 25, 2018, the balance outstanding under the EQM Term Loan Facility was repaid and the EQM Term Loan Facility was terminated on June 25, 2018 in connection with EQM's issuance of the 2018 Senior Notes (defined below).terminated. As a result of the termination, EQM expensed $3 million of deferred issuance costs. From April 25, 2018 through June 25, 2018, the maximum amount of EQM's outstanding borrowings under the EQM Term Loan Facility at any time was $1,825 million and the average daily balance was approximately $1,231 million. EQM incurred interest at a weighted average annual interest rate of approximately 3.3% for the period from April 25, 2018 through June 25, 2018.
RMP $850 Million Facility. RM Operating LLC (formerly known as Rice(formerly Rice Midstream OpCo LLC) (Rice Midstream OpCo), a wholly ownedwholly-owned subsidiary of RMP, had an $850$850 million credit facility. The RMP $850 Million Facility was available for general partnership purposes, including to purchase assets, and to fund working capital requirements and capital expenditures, pay dividends and repurchase units. The RMP $850 Million Facility was secured by mortgages and other security interests on substantially all of RMP's properties and was guaranteed by RMP and its restricted subsidiaries.
As of December 31, 2017, Rice Midstream OpCo had $286 million of borrowings and $1 million of letters of credit outstanding under thefacility (the RMP $850 Million Facilitymillion Facility). For the periods from July 1, 2018 through July 23, 2018 and from January 1, 2018 through July 23, 2018, the maximum amounts of RMP's outstanding borrowings under the RMP $850 Million Facility at any time were $260 million and $375 million, respectively, and the average daily outstanding balances under the RMP $850 Million Facility were approximately $249 million and $300 million, respectively. Interest was incurred on the RMP $850 Million Facility at weighted average annual interest rates of 4.1% and 3.8% for the periods from July 1, 2018 through July 23, 2018 and from January 1, 2018 through July 23, 2018, respectively.
In connection with the completion of the EQM-RMP Merger, on July 23, 2018, EQM repaid the approximately $260 million of borrowings outstanding under the RMP $850 Million Facility and the RMP $850 Million Facility was terminated. The RMP $850 Million Facility was available for general partnership purposes, including to purchase assets, and to fund working capital requirements and capital expenditures, pay distributions and repurchase units. The RMP $850 Million Facility was secured by mortgages and other security interests on substantially all of RMP's properties and was guaranteed by RMP and its restricted subsidiaries. During the three months ended March 31, 2018, the maximum outstanding borrowings were $336 million, the average daily balance was approximately $308 million and the weighted average annual interest rate for the period was approximately 3.6%.
EQM 4.125% and 4.00% Senior Notes. was terminated.In the fourth quarter of 2016, EQM issued $500 million aggregate principal amount of 4.125% senior notes due December 2026 (the 4.125% Senior Notes). EQM used the net proceeds from the offering to repay the

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then outstanding borrowings under a predecessor to the $3 billion Facility and for general partnership purposes. In the third quarter of 2014, EQM issued $500 million aggregate principal amount of 4.00% senior notes due August 2024 (the 4.00% Senior Notes). EQM used the net proceeds from the offering to repay the outstanding borrowings under a predecessor to the $3 billion Facility and for general partnership purposes.
Both the 4.125% Senior Notes and the 4.00% Senior Notes contain covenants that limit EQM's ability to, among other things, incur certain liens securing indebtedness, engage in certain sale and leaseback transactions and enter into certain consolidations, mergers, conveyances, transfers or leases of all or substantially all of EQM's assets.
2018 Senior Notes. During the second quarter of 2018, EQM issued 4.75% senior notes due July 15, 2023 in the aggregate principal amount of $1.1 billion, 5.50% senior notes due July 15, 2028 in the aggregate principal amount of $850 million and 6.50% senior notes due July 15, 2048 in the aggregate principal amount of $550 million (collectively, the 2018 Senior Notes). EQM received net proceeds from the offering of approximately $2,465.8 million, inclusive of a discount of $11.8 million and estimated debt issuance costs of $22.4 million. The net proceeds were used to repay the balances outstanding under the EQM Term Loan Facility and the RMP $850 Million Facility, and the remainder is expected to bewas used for general partnership purposes. The 2018 Senior Notes were issued pursuant to new supplemental indentures to EQM's existing indenture dated August 1, 2014. The 2018 Senior Notes contain covenants that limit EQM's ability to, among other things, incur certain liens securing indebtedness, engage in certain sale and leaseback transactions, and enter into certain consolidations, mergers, conveyances, transfers or leases of all or substantially all of the EQM's assets.
As of September 30, 2018,March 31, 2019, EQM was in compliance with all debt provisions and covenants.

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I.10.Fair Value Measurements
The carrying values of cash and cash equivalents, accounts receivable, amounts due to/from related parties and accounts payable approximate fair value due to the short maturity of the instruments; theseas such, their fair values are considered Level 1 fair value measurements. The carrying value of the credit facility borrowings approximates fair value as the interest rates are based on prevailing market rates; this is considered a Level 1 fair value measurement. As EQM's senior notes are not actively traded, their fair values are considered Level 2 fair value measurements and are estimated using a standard industryan income approach model that applies a discount rate based on prevailing market rates for debt with similar remaining time to maturitytime-to-maturity and credit risk.risk; as such, their fair values are Level 2 fair value measurements. As of September 30, 2018March 31, 2019 and December 31, 2017,2018, the estimated fair value of EQM's senior notes was approximately $3,532$3,504 million and $1,006$3,425 million, respectively, and the carrying value of EQM's senior notes was approximately $3,455$3,458 million and $987$3,457 million, respectively. The fair value of the Preferred Interest is a Level 3 fair value measurement and is estimated using an income approach model that applies a market-based discount rate. As of September 30, 2018March 31, 2019 and December 31, 2017,2018, the estimated fair value of the Preferred Interest was approximately $122$124 million and $133$122 million, respectively, and the carrying value of the Preferred Interest was approximately $116$114 million and $119$115 million, respectively.
J.11.Net Income per Limited Partner Unit and Cash Distributions
Net Income per Limited Partner Unit. Net income per limited partner unit is calculated utilizing the two-class method by dividing the limited partner interest in net income by the weighted average number of limited partner units outstanding during the period. The two-class method uses an earnings allocation method under which earnings per limited partner unit are calculated for each class of common unit and any participating security considering all dividends declared and participation rights in undistributed earnings as if all earnings had been distributed during the period. Diluted net income per limited partner unit reflects the potential dilution that could occur if securities or agreements to issue common units were exercised, settled or converted into EQM common units. EQM uses the treasury stock method to compute potential common units from phantom units granted to independent and non-employee directors and the if-converted method to compute potential common units related to the conversion of Class B units. For diluted earnings per unit, EQM uses the more dilutive of the if-converted method or the two-class method. The phantom units granted to the independent and non-employee directors of EQM's general partner will be paid in common units on a director’s termination of service on the Board of Directors of EQM's general partner. The weighted average phantom unit awards included in the calculation of basic weighted average limited partner units outstanding were 21,908 and 22,748 for the three months ended March 31, 2019 and 2018, respectively. 7,000,000 Class B units were included in the calculation of diluted weighted average limited partner units outstanding for the three months ended March 31, 2019 based upon the application of the if-converted method.
As a result of the EQM IDR Transaction, EQM’s common unitholders are entitled to all distributions until the Class B units are converted to common units (other than distributions in respect of the Series A Preferred Units). Class B unitholders have no rights to distributions until they are converted into common units. Accordingly, for all periods prior to such conversions, the Class B units are not considered participating securities under the two-class method. For the three months ended March 31, 2019, net income attributable to EQM was fully allocated to EQM’s common unitholders. For the three months ended March 31, 2018, EQM's net income was allocated to the general partner and limited partners in accordance with their respective

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ownership percentages. Any common units issued during the period are included on a monthly weighted-average basis for the periods in which they were outstanding.
The following table presents EQM's calculation of net income per limited partner unit for common and Class B limited partner units.
 Three Months Ended 
 March 31,
 2019 
2018(1)
 (Thousands, except per unit data)
Net income attributable to EQM$251,931
 $260,350
Less pre-acquisition net income allocated to parent—
 (83,132)
Less general partner interest in net income – general partner units—
 (3,117)
Less general partner interest in net income – IDRs—
 (44,164)
Limited partner interest in net income$251,931
 $129,937
    
Net income allocable to common units$251,931
 $129,937
Net income allocable to Class B units$—
 $—
    
Weighted average limited partner common units outstanding - basic154,259
 80,607
Weighted average limited partner common units outstanding - diluted(2)
161,259
 80,607
    
Net income per limited partner common unit - basic$1.63
 $1.61
Net income per limited partner common unit - diluted$1.56
 $1.61
(1)Net income attributable to the Drop-Down Transaction and the EQM-RMP Merger for the periods prior to May 1, 2018 and July 23, 2018, respectively, was not allocated to the limited partners for purposes of calculating net income per limited partner unit as these pre-acquisition amounts were not available to the EQM unitholders.
(2)Includes 7,000,000 Class B units accounted for under the if-converted method as if the units were outstanding for the entire period. Class B units are not a participating security as they do not participate in distributions.
EQM Distributions. On OctoberApril 23, 2018,2019, the Board of Directors of the EQM General PartnerEQM's general partner declared a cash distribution to EQM's unitholders for the thirdfirst quarter of 20182019 of $1.115$1.145 per common unit. The cash distribution will be paid on NovemberMay 14, 20182019 to unitholders of record at the close of business on November 2, 2018.May 3, 2019. Based on the EQM common units outstanding on October 25, 2018,April 30, 2019, cash distributions to EQGPEquitrans Midstream will be approximately $24.3$134.2 million related to its limited partner interest $2.5 million related to its general partner interestin EQM.
12.Subsequent Events
See Notes 2 and $71.0 million related to its IDRs in EQM. The distribution amounts to EQGP related to its general partner interest and IDRs in EQM are subject to change if EQM issues additional common units on or prior to the record date4 for the third quarter 2018 distribution.
RMP Distributions. Prior to the EQM-RMP Merger, the RMP partnership agreement required RMP to distribute all of its available cash (as defined in the RMP partnership agreement) to RMP unitholders within 45 daysa discussion of the endBolt-on Acquisition and the Private Placement, respectively, both of each quarter. Following the completion of the EQM-RMP Merger, RMP ceased to exist as a separate publicly traded entity and any future available cash will be subject to cash distributions under the EQM partnership agreement.which closed on April 10, 2019.

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EQM MIDSTREAM PARTNERS, LP AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of financial condition and results of operations in conjunction with the consolidated financial statements, and the notes thereto, included elsewhere in this report.
CAUTIONARY STATEMENTS
Disclosures in this Quarterly Report on Form 10-Q contain certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), and Section 27A of the Securities Act of 1933, as amended.amended (the Securities Act).  Statements that do not relate strictly to historical or current facts are forward-looking and usually identified by the use of words such as "anticipate," "estimate," "could," "would," "will," "may," "forecast," "approximate," "expect," "project," "intend," "plan," "believe" and other words of similar meaning in connection with any discussion of future operating or financial matters. Without limiting the generality of the foregoing, forward-looking statements contained in this Quarterly Report on Form 10-Q include the matters discussed in the section captioned "Outlook" in "Management's Discussion and Analysis of Financial Condition and Results of Operations," and the expectations of plans, strategies, objectives, and growth and anticipated financial and operational performance of EQM and its subsidiaries, including guidance regarding EQM's gathering, transmission and storage and water service revenue and volume growth; projected revenue and expenses; the weighted average contract life of gathering, transmission and storage and water services contracts; infrastructure programs (including the timing, cost, capacity and sources of funding with respect to gathering, transmission and storage and water expansion projects); the cost, capacity, timing of regulatory approvals, final design and anticipatedtargeted in-service datedates of the MVP and MVP Southgatecurrent projects; the ultimate terms, partners and structure of the MVP Joint Venture; expansion and integration and optimization projects in EQM's operating areas and in areas that would provide access to new markets; asset acquisitions, including EQM's ability to provide produced water handling services and realize expansion and optimization and integration opportunities and related capital avoidance; acquisitions and other strategic transactions, including joint ventures and the completed acquisition of interests in Eureka Midstream Holdings, LLC (Eureka Midstream) and Hornet Midstream Holdings, LLC (Hornet Midstream), and EQM's ability to identify and complete assettransactions, and effectively integrate transactions (including Eureka Midstream and Hornet Midstream) into EQM's operations, achieve anticipated synergies and accretion associated with transactions, including through increased scale; expected accretion from acquisitions; credit rating impacts associated with MVP and acquisitions and changes in EQM’s credit ratings; the timing and amount of future issuances of securities; effects of conversion, if at all, of EQM securities; effects of seasonality; expected growthcash flows and minimum volume commitments; capital commitments; projected capital contributions and capital and operating expenditures, including the amount and timing of production volumes in EQM's areasreimbursable capital expenditures, capital budget and sources of production;funds for capital expenditures; distribution amounts and timing, rates and growth; the impacteffect and outcome of pending and future litigation;litigation and regulatory proceedings; the timing of the proposed separation of EQT's production and midstream businesses (the Separation) and the parties' ability to complete the Separation; the amount and timing of distributions, including expected increases; the structure and timing of any simplification of the midstream structure to address the IDRs, if pursued and implemented; the amounts and timing of projected capital contributions and operating and capital expenditures, including the amount of capital expenditures reimbursable by EQT; the impacteffect of commodity prices on EQM's business; liquidity and financing requirements, including sources and availabilityavailability; EQM’s and EQM's planits subsidiaries’ respective abilities to increase its borrowing capacity up to $3 billion;service debt under, and comply with the covenants contained in, their respective credit agreements; the effects of government regulation;regulation and tariffs; and tax position. The forward-looking statements included in this Quarterly Report on Form 10-Q involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. EQM has based these forward-looking statements on the current expectations and assumptions of the management of EQM's general partner about future events. While EQM considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks and uncertainties, many of which are difficult to predict and are beyond EQM's control. The risks and uncertainties that may affect the operations, performance and results of EQM's businessbusinesses and forward-looking statements include, but are not limited to, those set forth under Item 1A, "Risk Factors" in EQM's Annual Report on Form 10-K for the year ended December 31, 2017,2018, as updated by Part II, Item 1A, "Risk Factors," of this Quarterly Report on Form 10-Q.
Any forward-looking statement speaks only as of the date on which such statement is made and EQM does not intend to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise.
In reviewing any agreements incorporated by reference in or filed with this Quarterly Report on Form 10-Q, please remember that such agreements are included to provide information regarding the terms of such agreements and are not intended to provide any other factual or disclosure information about EQM. The agreements may contain representations and warranties by EQM, which should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties to such agreements should those statements prove to be inaccurate. The representations and warranties were made only as of the date of the relevant agreement or such other date or dates as may be specified in such agreement and are subject to more recent developments. Accordingly, these representations and warranties alone may not describe the actual state of affairs of EQM or its affiliates as of the date they were made or at any other time.
EXECUTIVE OVERVIEW
For the three months ended September 30, 2018,March 31, 2019, net income attributable to EQM was $209.9$251.9 million compared to $142.9$260.4 million for the three months ended September 30, 2017.March 31, 2018. The increasedecrease resulted primarily from higher gathering and water revenues, which were driven mainly by the EQM-RMP Merger and the May 2018 Acquisition, which support production development in the Marcellus and Utica Shales,net interest expense and higher equity income,operating expenses, partly offset by higher operating expensesgathering revenues and higher net interest expense.equity income.
On April 23, 2019, the Board of Directors of the EQM general partner declared a cash distribution to EQM's common unitholders of $1.145 per unit, which was 1.3% higher than the fourth quarter 2018 distribution of $1.13 per unit and 7.5% higher than the first quarter 2018 distribution of $1.065 per unit.

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For the nine months ended September 30, 2018, net income attributable to EQM was $704.1 million compared to $425.3 million for the nine months ended September 30, 2017. The increase primarily resulted from higher gathering, transmission and water revenues, which were driven mainly by the EQM-RMP Merger and the May 2018 Acquisition, which support production development in the Marcellus and Utica Shales, and higher equity income, partly offset by an increase in operating expenses and higher net interest expense.
EQM declared a cash distribution to its unitholders of $1.115 per unit on October 23, 2018, which was 2% higher than the second quarter 2018 distribution of $1.09 per unit and 14% higher than the third quarter 2017 distribution of $0.98 per unit.
Business Segment Results
Operating segments are revenue-producing components of thean enterprise for which separate financial information is produced internally and is subject to evaluation by the chief operating decision maker in deciding how to allocate resources. Other income and net interest expense are managed on a consolidated basis. EQM has presented each segment's operating income and various operational measures in the following sections. Management believes that the presentation of this information providesis useful information to management and investors regarding the financial condition, results of operations and trends of its segments. EQM has reconciled each segment's operating income to EQM's consolidated operating income and net income in Note E5 to the consolidated financial statements.
GATHERING RESULTS OF OPERATIONS
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended March 31,
2018 (1)
 2017 % Change 
2018 (1)
 2017 % Change2019 
2018 (1)
 % Change
(Thousands, except per day amounts)(Thousands, except per day amounts)
FINANCIAL DATA             
Firm reservation fee revenues(2)$112,598
 $104,772
 7.5 $334,233
 $300,901
 11.1$128,959
 $109,933
 17.3
Volumetric based fee revenues:        
Usage fees under firm contracts (2)
8,661
 7,873
 10.0 30,725
 19,173
 60.3
Usage fees under interruptible contracts(3)
131,602
 3,877
 3,294.4 366,482
 10,922
 3,255.4
Total volumetric based fee revenues140,263
 11,750
 1,093.7 397,207
 30,095
 1,219.8
Volumetric-based fee revenues:132,922
 127,457
 4.3
Total operating revenues252,861
 116,522
 117.0 731,440
 330,996
 121.0261,881
 237,390
 10.3
Operating expenses:             
Operating and maintenance18,850
 10,104
 86.6 54,551
 30,737
 77.515,253
 15,113
 0.9
Selling, general and administrative20,363
 10,503
 93.9 62,665
 28,800
 117.622,534
 17,788
 26.7
Separation and other transaction costs3,513
 —
 100.0
Depreciation25,359
 9,983
 154.0 72,309
 28,398
 154.628,116
 23,068
 21.9
Amortization of intangible assets10,387
 —
 100.0 31,160
 —
 100.010,387
 10,386
 —
Total operating expenses74,959
 30,590
 145.0 220,685
 87,935
 151.079,803
 66,355
 20.3
Operating income$177,902
 $85,932
 107.0 $510,755
 $243,061
 110.1$182,078
 $171,035
 6.5
             
OPERATIONAL DATA 
  
    
  
   
  
  
Gathered volumes (BBtu per day)             
Firm capacity reservation2,114
 1,838
 15.0 2,029
 1,783
 13.8
Volumetric based services (4)
4,437
 370
 1,099.2 4,291
 292
 1,369.5
Firm capacity reservation (2)
2,572
 1,956
 31.5
Volumetric-based services4,194
 4,227
 (0.8)
Total gathered volumes6,551
 2,208
 196.7 6,320
 2,075
 204.66,766
 6,183
 9.4
             
Capital expenditures$194,477
 $48,182
 303.6 $515,072
 $150,728
 241.7
Capital expenditures(3)
$207,717
 $134,138
 54.9
(1)Includes the pre-acquisition results of the May 2018 AcquisitionDrop-Down Transaction and the EQM-RMP Merger, which were effective on May 1, 2018 and July 23, 2018, respectively. The recast is for the period the acquired businesses were under the common control of EQT, which began on November 13, 2017 as a result of the Rice Merger.
(2)Includes fees onrevenues and volumes gathered in excess of firm contracted capacity.from contracts with minimum volume commitments (MVCs).
(3)
Includes volumesapproximately $49.7 million of non-operating assets acquired from contracts under which EQM has agreed to hold capacity available without charging a capacity reservation fee.
Equitrans Midstream in the Shared Assets Transaction that primarily support EQM's gathering activities. See Note 2 for further detail.
(4)Includes volumes gathered under interruptible contracts and volumes gathered in excess of firm contracted capacity.

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Three Months Ended September 30, 2018March 31, 2019 Compared to Three Months Ended September 30, 2017March 31, 2018
Gathering revenues increased by $136.3$24.5 million for the three months ended September 30, 2018March 31, 2019 compared to the three months ended September 30, 2017March 31, 2018 primarily driven by the EQM-RMP Merger, the May 2018 Acquisition and affiliate and third party production development in the Marcellus and Utica Shales. Firm reservation fee revenues increased primarily as a result of increased affiliate contracted gathering capacity and higher rates on various affiliate wellhead expansion projects in the current period. Usage feesfirst quarter, as well as increased revenues generated under firm contractsagreements with MVCs. Volumetric-based fee revenues increased due to increased third party volumes gathered in excess of firm contracted capacity. Usage fees under interruptible contracts increased as a result of the EQM-RMP Merger and the May 2018 Acquisition, which added revenues of $69.7 million and $58.4 million, respectively, for the three months ended September 30, 2018.usage fees.
Operating expenses increased by $44.4$13.4 million for the three months ended September 30, 2018March 31, 2019 compared to the three months ended September 30, 2017. Operating expenses increased $17.9 million and $24.5 million as a result of the EQM-RMP Merger and the MayMarch 31, 2018 Acquisition, respectively. In addition, operating and maintenance expense increased due to higher repairs and maintenance expense consistent with the growth of the business. Selling, general and administrative also increased due to transaction costs of $2.2 million. Depreciation expense also increased as a result of additional assets placed in-service. Amortization of intangible assets relates to the customer contract intangible associated with the May 2018 Acquisition.
Nine Months Ended September 30, 2018 Compared to Nine Months Ended September 30, 2017
Gathering revenues increased by $400.4 million for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 primarily driven by the EQM-RMP Merger, the May 2018 Acquisition and affiliate and third party production development in the Marcellus and Utica Shales. Firm reservation fee revenues increased primarily as a result of increased affiliate and third party contracted gathering capacity and higher rates on various affiliate wellhead expansion projectsa $5.0 million increase in the current period. Usage fees under firm contracts increased due to increased third party and affiliate volumes gathered in excess of firm contracted capacity. Usage fees under interruptible contracts increased as a result of the EQM-RMP Merger and the May 2018 Acquisition, which added revenues of $193.5 million and $161.9 million, respectively, for the nine months ended September 30, 2018.
Operating expenses increased by $132.8 million for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017. Operating expenses increased $53.2 million and $72.8 million as a result of the EQM-RMP Merger and the May 2018 Acquisition, respectively. In addition, operating and maintenancedepreciation expense increased due to higher repairs and maintenance expense consistent with the growth of the business. Selling, general and administrative also increased due to transaction costs of $7.5 million. Depreciation expense also increased as a result of additional assets placed in-service including those associated withand a $4.7 million increase in selling, general and administrative expense resulting from higher corporate allocations. In addition, EQM recognized $3.5 million of transaction costs in the Range Resources header pipeline project and various wellhead gathering expansion projects. Amortizationfirst quarter of intangible assets relates to customer contract intangible associated with the May 2018 Acquisition.2019.

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TRANSMISSION RESULTS OF OPERATIONS
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended March 31,
2018 2017 % Change 2018 2017 % Change2019 2018 % Change
(Thousands, except per day amounts)(Thousands, except per day amounts)
FINANCIAL DATA                
Firm reservation fee revenues$82,669
 $84,438
 (2.1) $262,666
 $256,224
 2.5
$99,224
 $97,775
 1.5
Volumetric based fee revenues:           10,635
 9,159
 16.1
Usage fees under firm contracts (1)
5,331
 3,427
 55.6
 13,981
 9,787
 42.9
Usage fees under interruptible contracts1,350
 1,906
 (29.2) 8,782
 6,173
 42.3
Total volumetric based fee revenues6,681
 5,333
 25.3
 22,763
 15,960
 42.6
Total operating revenues89,350
 89,771
 (0.5) 285,429
 272,184
 4.9
109,859
 106,934
 2.7
Operating expenses:                
Operating and maintenance10,721
 9,485
 13.0
 27,082
 23,984
 12.9
4,084
 7,551
 (45.9)
Selling, general and administrative7,581
 8,255
 (8.2) 22,335
 23,170
 (3.6)8,492
 7,491
 13.4
Depreciation12,357
 12,261
 0.8
 37,228
 35,793
 4.0
12,533
 12,441
 0.7
Total operating expenses30,659
 30,001
 2.2
 86,645
 82,947
 4.5
25,109
 27,483
 (8.6)
Operating income$58,691
 $59,770
 (1.8) $198,784
 $189,237
 5.0
$84,750
 $79,451
 6.7
                
Equity income$16,087
 $6,025
 167.0
 $35,836
 $15,413
 132.5
$31,063
 $8,811
 252.5
                
OPERATIONAL DATA 
  
  
  
  
  
 
  
  
Transmission pipeline throughput (BBtu per day)                
Firm capacity reservation2,927
 2,517
 16.3
 2,857
 2,288
 24.9
2,959
 2,815
 5.1
Volumetric based services (2)
104
 21
 395.2
 62
 22
 181.8
Volumetric based services105
 42
 150.0
Total transmission pipeline throughput3,031
 2,538
 19.4
 2,919
 2,310
 26.4
3,064
 2,857
 7.2
                
Average contracted firm transmission reservation commitments (BBtu per day)3,658
 3,474
 5.3
 3,801
 3,519
 8.0
4,442
 4,140
 7.3
                
Capital expenditures$37,626
 $22,312
 68.6
 $84,517
 $73,679
 14.7
$18,762
 $18,929
 (0.9)
(1)Includes fees on volumes transported in excess of firm contracted capacity as well as usage fees and fees on all volumes transported under firm contracts.
(2)Includes volumes transported under interruptible contracts and volumes transported in excess of firm contracted capacity.
Three Months Ended September 30, 2018March 31, 2019 Compared to Three Months Ended September 30, 2017March 31, 2018
Transmission and storage revenues decreasedincreased by $0.4$2.9 million for the three months ended September 30, 2018March 31, 2019 compared to the three months ended September 30, 2017.March 31, 2018. Firm reservation fee revenues decreased as a result of a third quarter 2017 FERC-approved retroactive negotiated rate adjustment of approximately $3.4 million for the period from October 1, 2016 through June 30, 2017 partially offset by increased affiliate firm capacity anddue to higher contractual rates on existing contracts with third parties in the current period. Usage fees undercustomers and customers contracting for additional firm contractstransmission capacity. Volumetric-based fee revenues increased primarily due to higher affiliate and third party volumes and increased commodity charges on higher firm contracted volumes. The decrease in usage fees under interruptible contracts primarily relates to lower parking revenue, which does not have associated pipeline throughput.fees.
Operating expenses increaseddecreased by $0.7$2.4 million for the three months ended September 30, 2018March 31, 2019 compared to the three months ended September 30, 2017March 31, 2018 primarily as a result of higherlower operating and maintenance personnel costsexpense, partly offset by lowerincreased selling, general and administrative expensesexpense resulting from lower allocations from EQT and professional fees.higher corporate allocations.
The increase in equity income of $10.1$22.3 million for the three months ended September 30, 2018March 31, 2019 compared to the three months ended September 30, 2017March 31, 2018 was related to the increase in the MVP Joint Venture's AFUDC on the MVP.

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Nine Months Ended September 30, 2018 Compared to Nine Months Ended September 30, 2017
Transmission and storage revenues increased by $13.2 million for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017. Firm reservation fee revenues increased due to higher contractual rates on existing contracts with third parties and affiliates in the current period and affiliates contracting for additional firm capacity. Usage fees under firm contracts increased primarily due to increased commodity charges. The increase in usage fees under interruptible contracts primarily relates to higher parking revenue, which does not have associated pipeline throughput.
Operating expenses increased by $3.7 million for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 consistent with the growth of the business.
Equity income increased $20.4 million for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 due to the increase in the MVP Joint Venture's AFUDC on the MVP.
WATER RESULTS OF OPERATIONS
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended March 31,
2018 2017 % Change 2018 2017 % Change2019 
2018 (1)
 % Change
(Thousands)(Thousands)
FINANCIAL DATA             
Water services revenues$22,373
 $—
 100.0 $93,438
 $—
 100.0$18,042
 $26,702
 (32.4)
             
Operating expenses:             
Operating and maintenance18,521
 —
 100.0 36,901
 —
 100.08,546
 4,508
 89.6
Selling, general and administrative1,094
 —
 100.0 3,490
 —
 100.01,894
 1,111
 70.5
Depreciation5,851
 —
 100.0 17,420
 —
 100.06,416
 5,771
 11.2
Total operating expenses25,466
 —
 100.0 57,811
 —
 100.016,856
 11,390
 48.0
Operating (loss) income$(3,093) $—
 100.0 $35,627
 $—
 100.0
Operating income$1,186
 $15,312
 (92.3)
             
OPERATIONAL DATA 
  
    
  
   
  
  
Water services volumes (MMgal)449
 —
 100.0 1,740
 —
 100.0369
 541
 (31.8)
Capital expenditures$7,981
 $—
 100.0 $17,358
 $—
 100.0$9,175
 $2,375
 286.3
(1)EQM's consolidated financial statements have been retrospectively recast to include the pre-acquisition results of the EQM-RMP Merger, which was effective July 23, 2018. The recast is for the period the acquired businesses were under the common control of EQT, which began on November 13, 2017 as a result of the Rice Merger.
Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018
This table sets forth selected financial and operational dataWater operating revenues decreased by $8.7 million for the water segment. EQT acquiredthree months ended March 31, 2019 compared to the water assets that constitute EQM's water segment on November 13, 2017 as part of the Rice Merger.
The water segment providesthree months ended March 31, 2018 primarily due to a 32% decrease in fresh water for well completion operations in the Marcellus and Utica Shales and collects flowback and produced water for recycling or disposal. Substantially alldistribution volumes associated with timing of EQM's water services are provided to EQT 's Production business. EQM offers its water services on a volumetric basis, supported by an acreage dedication from EQT for certain drilling areas.operations. The fee EQM charges per gallon of water is tiered and thus is lower on a per gallon basis once certain volumetric thresholds are met. During the three and nine months ended September 30, 2018,
Water operating expenses were composed of customary expenses for a water business, including water procurement costs. The operating lossincreased by $5.5 million for the three months ended September 30,March 31, 2019 compared to the three months ended March 31, 2018 was due toprimarily as a result of increased operating and maintenance expense associated with timing of costs related to activities on drilling pads.pads in the prior year and increased depreciation expense as a result of additional assets placed in-service.
Other Income Statement Items
The increase in net interest expense of $31.6Other income
Other income increased $1.3 million for the three months ended September 30, 2018March 31, 2019 compared to the three months ended September 30, 2017 was primarilyMarch 31, 2018 due to increased AFUDC – equity.
Net interest expense
Net interest expense increased by $36.7 million for the three months ended March 31, 2019 compared to the three months ended March 31, 2018 due primarily to higher interest expense of $33.7 million onas a result of the 2018 Senior Notes and higher interest expense of $4.1 million on credit facility borrowings, partly offset by increased capitalized interest and AFUDC - debt. The increase in net
Noncontrolling interest expense of $50.7 million for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 was primarily due to increased interest of $35.9 million on the 2018 Senior Notes, $17.1 million on higher borrowings under the credit facilities as well as interest and deferred issuance costs on the EQM Term Loan, partly offset by higher capitalized interest and AFUDC - debt.
Net income attributable to noncontrolling interest for the ninethree months ended September 30,March 31, 2018 was $3.3 million related to the 25% limited liability interest in Strike Force Midstream acquired from Gulfport.owned by Gulfport Midstream. As discussed in Note A,2, on May 1, 2018, EQM acquired this interest.interest from Gulfport Midstream. As a result, EQM owned 100% of Strike Force Midstream effective as of May 1, 2018.

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See "Investing Activities" and "Capital Requirements" in the "Capital Resources and Liquidity" section below for a discussion of capital expenditures.

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Non-GAAP Financial Measures
Adjusted EBITDA and distributable cash flow are non-GAAP supplemental financial measures that management and external users of EQM's consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, use to assess:
EQM's operating performance as compared to other publicly traded partnerships in the midstream energy industry without regard to historical cost basis or, in the case of adjusted EBITDA, financing methods;
the ability of EQM's assets to generate sufficient cash flow to make distributions to EQM's unitholders;
EQM's ability to incur and service debt and fund capital expenditures; and
the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.
EQM believes that adjusted EBITDA and distributable cash flow provide useful information to investors in assessing its financial condition and results of operations. Adjusted EBITDA and distributable cash flow should not be considered as alternatives to net income, operating income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA and distributable cash flow have important limitations as analytical tools because they exclude some, but not all, items that affect net income and net cash provided by operating activities. Additionally, because adjusted EBITDA and distributable cash flow may be defined differently by other companies in its industry, EQM's adjusted EBITDA and distributable cash flow may not be comparable to similarly titled measures of other companies, thereby diminishing the utility of the measures. Distributable cash flow should not be viewed as indicative of the actual amount of cash that EQM has available for distributions from operating surplus or that it plans to distribute.distribute and is not intended to be a liquidity measure.

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Reconciliation of Non-GAAP Financial Measures
The following table presents a reconciliation of EQM's non-GAAP financial measures of adjusted EBITDA and distributable cash flow with the most directly comparable EQM GAAP financial measures of net income attributable to EQM and net cash provided by operating activities.
Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,		Three Months Ended 
 March 31,
2018 2017 2018 2017
2019(4)
 2018
(Thousands)(Thousands)
Net income attributable to EQM$209,927
 $142,938
 $704,109
 $425,273
$251,931
 $260,350
Add:          
Net interest expense41,005
 9,426
 76,740
 26,014
49,356
 12,670
Depreciation43,567
 22,244
 126,957
 64,191
47,065
 41,280
Amortization of intangible assets10,387
 —
 31,160
 —
10,387
 10,386
Preferred Interest payments2,746
 2,746
 8,238
 8,238
2,746
 2,746
Non-cash long-term compensation expense636
 —
 1,275
 225
255
 499
Transaction costs (1)
2,161
 —
 7,511
 —
Separation and other transaction costs3,513
 —
Less:          
Equity income(16,087) (6,025) (35,836) (15,413)(31,063) (8,811)
AFUDC – equity(1,448) (831) (3,585) (4,128)(2,346) (1,065)
Adjusted EBITDA attributable to the May 2018 Acquisition(2)
—
 —
 (60,507) —
Adjusted EBITDA attributable to RMP prior to the merger(3)
(12,825) —
 (160,128) —
Adjusted EBITDA attributable to the Drop-Down Transaction(1)
—
 (44,090)
Adjusted EBITDA attributable to RMP prior to the merger(2)
—
 (69,534)
Adjusted EBITDA$280,069
 $170,498
 $695,934
 $504,400
$331,844
 $204,431
Less:          
Net interest expense excluding interest income on the Preferred Interest(42,921) (11,123) (77,757) (31,149)(50,962) (12,500)
Capitalized interest and AFUDC – debt(3,202) (867) (5,959) (3,475)(4,687) (817)
Ongoing maintenance capital expenditures net of expected reimbursements(4)
(13,181) (8,110) (24,161) (14,180)
Transaction costs(2,161) —
 (7,511) —
Distributable cash flow$218,604
 $150,398
 $580,546
 $455,596
Ongoing maintenance capital expenditures net of expected reimbursements(3)
(9,398) (3,865)
Distributable cash flow(4)
$266,797
 $187,249
          
Net cash provided by operating activities$242,575
 $159,898
 $865,482
 $480,203
$160,973
 $283,958
Adjustments:          
Capitalized interest and AFUDC – debt(3,202) (867) (5,959) (3,475)(4,687) (817)
Principal payments received on the Preferred Interest1,109
 1,049
 3,281
 3,103
1,141
 1,079
Ongoing maintenance capital expenditures net of expected reimbursements(4)
(13,181) (8,110) (24,161) (14,180)
Adjusted EBITDA attributable to the May 2018 Acquisition(2)
—
 —
 (60,507) —
Adjusted EBITDA attributable to RMP prior to the merger(3)
(12,825) —
 (160,128) —
Ongoing maintenance capital expenditures net of expected reimbursements(3)
(9,398) (3,865)
Adjusted EBITDA attributable to the Drop-Down Transaction(1)
—
 (44,090)
Adjusted EBITDA attributable to RMP prior to the merger(2)
—
 (69,534)
Other, including changes in working capital4,128
 (1,572) (37,462) (10,055)118,768
 20,518
Distributable cash flow$218,604
 $150,398
 $580,546
 $455,596
Distributable cash flow(4)
$266,797
 $187,249
(1)There were no transaction costs for the three and nine months ended September 30, 2017.
(2)Adjusted EBITDA attributable to the May 2018 AcquisitionDrop-Down Transaction for the period prior to May 1, 2018 was excluded from EQM's adjusted EBITDA calculations as these amounts were generated by assets acquired in the May 2018 AcquisitionDrop-Down Transaction prior to acquisition by EQM; therefore, the amounts could not have been distributed to EQM's unitholders. Adjusted EBITDA attributable to the May 2018 AcquisitionDrop-Down Transaction for the ninethree months ended September 30, 2018March 31, 2019 was calculated as net income of $41.0$29.6 million plus depreciation of $5.8$4.2 million and amortization of intangible assets of $13.8$10.4 million, less interest income of less than $0.1 million.

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(3)(2)Adjusted EBITDA attributable to RMP for the period prior to July 23, 2018 was excluded from EQM's adjusted EBITDA calculations as these amounts were generated by RMP prior to acquisition by EQM. Adjusted EBITDA attributable to RMP for the three and nine months ended September 30, 2018March 31, 2019 was calculated as net income of $8.5$53.5 million and $123.2 million, respectively, plus net interest expense of $0.3$2.0 million, and $4.6 million, respectively, depreciation of $3.4$13.9 million and $31.4 million, respectively, and non-cash compensation expense of $0.6 million and $0.9 million, respectively.$0.1 million.
(4)(3)Ongoing maintenance capital expenditures net of expected reimbursements excludes ongoing maintenance that EQM expects to be reimbursed or that was reimbursed by EQT under the terms of EQM's omnibus agreementthe EQT Omnibus Agreement of $0.5 millionzero and $1.7$2.8 million for the three months ended September 30,March 31, 2019 and 2018, and 2017, respectively, and $3.9 million and $2.6 million for the nine months ended September 30, 2018 and 2017, respectively. For the three and nine months ended September 30,March 31, 2018, it also excludes $0.3ongoing maintenance capital

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expenditures net of expected reimbursements also excluded $3.1 million and $1.1 million, respectively, of ongoing maintenance capital expenditures attributable to RMP prior to the EQM-RMP Merger.
(4)EQM believes that calculating distributable cash flow without deducting separation and other transaction costs provides investors with greater insight into the period-to-period ability of EQM’s ongoing assets and operations to generate cash flow. If separation and other transaction costs were deducted from the calculation, EQM’s distributable cash flow for the three-month period ended March 31, 2019 would have been $263.3 million and would not have changed for the three months ended March 31, 2018.
See "Executive Overview" above for a discussion of net income attributable to EQM, the GAAP financial measure most directly comparable to adjusted EBITDA. EQM's adjusted EBITDA increased by $109.6$127.4 million for the three months ended September 30, 2018March 31, 2019 compared to the three months ended September 30, 2017 and $191.5 million for the nine months ended September 30,March 31, 2018 compared to the nine months ended September 30, 2017 primarily as a result of the EQM-RMP Merger and the May 2018 Acquisition,Drop-Down Transaction, which resulted in adjusted EBITDA subsequent to the transactions being reflected in adjusted EBITDA.
Net cash provided by operating activities, the GAAP financial measure most directly comparable to distributable cash flow, increaseddecreased by $385.3$123.0 million for the ninethree months ended September 30, 2018March 31, 2019 compared to the ninethree months ended September 30, 2017March 31, 2018 as discussed in "Capital Resources and Liquidity." Distributable cash flow increased by $68.2$79.5 million for the three months ended September 30, 2018March 31, 2019 compared to the three months ended September 30, 2017 and $125.0 million for the nine months ended September 30,March 31, 2018 compared to the nine months ended September 30, 2017 mainly attributable to the increase in EQM's adjusted EBITDA, partly offset by increased net interest expense.
Outlook
EQM’s assets overlay core acreage in the prolific Appalachian Basin. The location of EQM’s assets allows it to access major demand markets in the U.S. EQM is one of the largest natural gas gatherers in the U.S., and its largest customer, EQT, is the largest natural gas producer in the U.S. based on produced volumes. EQM maintains a stable cash flow profile, with over 50% of its revenue for the three months ended March 31, 2019 generated by firm reservation fees.
EQM’s principal strategy is to focus on leveragingleverage its existing assets and planned asset basegrowth projects and to developseek and execute on strategically-aligned acquisition and joint venture opportunities, such as its completed acquisition of interests in Eureka Midstream and Hornet Midstream, to achieve the scale and scope of a top-tier midstream company. As part of its approach to organic projects that will further expandgrowth, EQM is focused on building and extendcompleting its asset footprint. Those organic projects will primarily involvekey gathering and transporting gas supplytransmission growth projects outlined below, many of which are supported by contracts with firm capacity commitments. Additionally, EQM expects to achieve growth from its water service business and from volumetric gathering opportunities and transmission and storage services. The water service business is complementary to the largestgathering business, and growing North American basin, providingEQM recognizes an opportunity to expand its existing asset footprint and is actively pursuing solutions for produced water handling. EQM is also focused on optimizing and other midstream servicesintegrating its Pennsylvania gathering systems to those same producerscreate additional system gathering capacity and increasing access to localprovide high- and distant markets.low-pressure gathering solutions for its customers. EQM’s focus on execution of its organic projects, coupled with asset optimization efforts, disciplined capital spendspending and operating cost control, will beis complemented by EQM’s focuscommitment to seek, evaluate and execute on strategically alignedstrategically-aligned acquisition and joint venture opportunities. EQM believes that this approach will enable EQM to achieve its strategic goals.
EQM’s assets, located in southwestern Pennsylvania, northern West Virginia and southeastern Ohio, are uniquely positioned across the Marcellus, Utica and Upper Devonian Shales. EQM expects that the following expansion projects will allow it to capitalize on drilling activity by EQT and other producers to executebe its strategy:primary organic growth drivers:
Mountain Valley Pipeline. The MVP Joint Venture is a joint venture withamong EQM and affiliates of each of NextEra Energy, Inc., ConsolidatedCon Edison, Inc., AltaGas Ltd. and RGC Resources, Inc. that is constructing the MVP. As of March 31, 2019, EQM is the operator of the MVP and owned a 45.5% interest in the MVP Joint Venture as of September 30, 2018. project. The MVP is an estimated 300 mile, 42-inch diameter MVP hasnatural gas interstate pipeline with a targeted capacity of 2.0 Bcf per day and is estimated tothat will span 300 miles extending from EQM's existing transmission and storage system in Wetzel County, West Virginia to Pittsylvania County, Virginia, providing access to the growing Southeastsoutheast demand markets. As currently designed,During the first quarter of 2019, EQM made capital contributions of approximately $143 million to the MVP is estimated to cost a totalJoint Venture for the MVP project. For the remainder of approximately $4.6 billion, excluding AFUDC, with EQM funding approximately $2.2 billion through capital contributions made to the joint venture, which includes approximately $65 million in excess of EQM's ownership interest. In 2018,2019, EQM expects to providemake capital contributions of $0.8 billion to $1.0approximately $0.7 billion to the MVP Joint Venture.Venture, depending on the timing of the construction of the MVP and the MVP Southgate projects. The MVP Joint Venture has secured a total of 2.0 Bcf per day of firm capacity commitments at 20-year terms including an initial 1.29 Bcf per day firm capacity commitment by EQT, and is currently in negotiation with additional shippers that have expressed interest in the MVP project. Although the current targeted capacity of the MVP is fully subscribed, additional shippers have expressed an interest in subscribing to the MVP if theThe MVP Joint Venture adds compression tois evaluating an expansion opportunity that could add approximately 0.5 Bcf per day of capacity through the currently planned pipeline system, which would allow additional volumes to be transported without additional pipe in the ground, or extends the pipeline through projects such asinstallation of incremental compression. The MVP Joint Venture is also undertaking the MVP Southgate project.

project and is evaluating other future pipeline extension projects.
In October 2017, the FERC issued the Certificate of Public Convenience and Necessity for the project.MVP. In the first quarter of 2018, the MVP Joint Venture received limited notice to proceed with certain construction activities from the FERC and commenced construction. As discussed under "The regulatory approval process for the construction of new midstream assets is challenging, and recent decisions by regulatory and judicial authorities in pending

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proceedings could impact ourEQM's or the MVP Joint Venture's ability to obtain all approvals and authorizations necessary to complete certain projects on the projected time frame or at all or ourEQM's ability to achieve the expected investment return on the project" underincluded in Item 1A, "Risk Factors" of this Quarterlyin EQM’s Annual Report on Form 10-Q,10-K for the year ended December 31, 2018, there are

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several pending legal and regulatory challenges to certain aspects of the MVP project that must be resolved before the MVP project can be completed. The MVP Joint Venture is working through several alternatives to respondaddress these challenges. Although completing the project during 2019 is unlikely, the MVP Joint Venture continues to target a full in-service date in the fourth quarter 2019 at an overall project cost of $4.6 billion, excluding AFUDC. EQM is expected to fund approximately $2.2 billion of the overall project cost, including approximately $65 million in excess of EQM's ownership interest. See the discussion of the litigation and regulatory-related delays in Part II, Item 1, "Legal Proceedings."
Wellhead Gathering Expansion and Hammerhead Project. During the first quarter of 2019, EQM invested approximately $152 million in gathering expansion projects. For the remainder of 2019, EQM expects to invest approximately $800 million in gathering expansion projects, including the continued gathering infrastructure expansion of core development areas in the Marcellus and Utica Shales, primarily in southwestern Pennsylvania and eastern Ohio, for EQT, Range Resources Corporation (Range Resources) and other producers, and the Hammerhead project, a 1.6 Bcf per day gathering header pipeline that is primarily designed to connect natural gas produced in Pennsylvania and West Virginia to the courtMVP and agency decisions and restore all permits.is supported by a 1.2 Bcf per day firm capacity commitment from EQT. The MVPHammerhead project is targetedexpected to cost approximately $555 million. During the first quarter of 2019, EQM invested approximately $55 million in the Hammerhead project. For the remainder of 2019, EQM expects to invest approximately $300 million in the Hammerhead project. The Hammerhead project is expected to be placed in-servicein service in conjunction with the MVP project during the fourth quarter of 2019, subject to litigation and regulatory-related delay as further discussed under Item 1A, "Risk Factors."

2019.
MVP Southgate Project.In April 2018, the MVP Joint Venture announced the MVP Southgate project, a proposed 70-mile interstate pipeline that will extend from the MVP at Pittsylvania County, Virginia to new delivery points in Rockingham and Alamance Counties, North Carolina. ThisThe MVP Southgate project is anchoredbacked by a 300 MMcf per day firm capacity commitment from PSNC Energy. As designed, the MVP Southgate project has expansion capabilities up to 900 MMcf per day of total capacity. The preliminaryMVP Southgate project is estimated to cost estimate is $350a total of approximately $450 million to $500 million, which is expected to be spent primarily in 2019 and 2020. During the first quarter of 2019, EQM hasmade capital contributions of approximately $2 million to the MVP Joint Venture for the MVP Southgate project. For the remainder of 2019, EQM expects to provide capital contributions of approximately $40 million to the MVP Joint Venture for the MVP Southgate project. As of March 31, 2019, EQM was the operator of the MVP Southgate pipeline and owned a 32.7% ownership47.2% interest in the MVP Southgate project. The MVP Joint Venture submitted the MVP Southgate certificate application to the FERC in November 2018. In March 2019, the FERC issued an environmental review schedule that states that the FERC plans to issue the final Environmental Impact Statement by December 19, 2019. The schedule also identifies March 18, 2020 as the deadline for other agencies to act on other federal authorizations required for the project and will operate the pipeline.(the FERC, however, is not subject to this deadline). Subject to approval by the FERC, the MVP Southgate project has a targeted in-service date of the fourth quarter 2020.
Wellhead Gathering Expansion. EQM estimates capital expenditures of approximately $750 million during 2018 on gathering expansion projects, primarily driven by wellhead and header projects in Pennsylvania, West Virginia and Ohio. These gathering projects include approximately $225 million on expansion of the legacy RMP gathering system, approximately $235 million on expansion of the gathering systems acquired in the May 2018 Acquisition and approximately $150 million on commencing construction activities on the Hammerhead project. The Hammerhead project is a 1.2 Bcf per day gathering header pipeline connecting natural gas produced in Pennsylvania and West Virginia to the MVP primarily for EQT that is expected to cost a total of $555 million and be placed in service in the fourth quarter of 2019.2020.
Transmission Expansion. In 2018,During the first quarter of 2019, EQM estimates capital expendituresinvested approximately $16 million in transmission expansion projects. For the remainder of 2019, EQM expects to invest approximately $100$40 million for otherin transmission expansion projects, primarily attributable to the Equitrans, L.P. Expansion project. TheAllegheny Valley Connector (AVC), the Equitrans, L.P. Expansion project, which is designed to provide north-to-south capacity on the mainline Equitrans, L.P. system, including for deliveries to the MVP.MVP, and power plant projects. The Equitrans, L.P. Expansion project has a targeted in-service date of the fourth quarter of 2019. In January 2019, EQM executed a precedent agreement with ESC Brooke County Power I, LLC to construct a natural gas pipeline for connection to a proposed 830-Megawatt power plant in Brooke County, West Virginia. The agreement includes a ten-year firm reservation commitment for 140 MMcf per day of capacity. EQM expects to invest an estimated $80 million to construct the approximately 16-mile pipeline, which has a targeted in-service date of mid-year 2022.
Water Projects.Expansion. In 2018,During the first quarter of 2019, EQM plansinvested approximately $9 million in the expansion of its fresh water delivery infrastructure. For the remainder of 2019, EQM expects to invest approximately $25$91 million in the expansion of its fresh water delivery infrastructure in Pennsylvania and Ohio. During the first quarter of 2019, EQM expanded its water service relationship with EQT and entered into agreements with four other Marcellus and Utica producers. Based on the timing of customer well schedules, a majority of the fresh water infrastructure projects.services revenue is expected in the second half of 2019.
See further discussion of capital expenditures in the "Capital Requirements" section below.
Separation of EQT’s Production and Midstream Businesses
On October 24, 2018, EQT announced that its board of directors approvedSee Note 2 to the completionconsolidated financial statements for further discussion of the separation of EQT’s upstream and midstream businesses, creating a standalone publicly traded corporation, Equitrans Midstream Corporation (Equitrans Midstream), that will focus on midstream operations. Following the Separation, Equitrans Midstream will own the midstream interests held by EQT, including EQT’s interests in EQGP and EQM. Under the Separation plan, EQT will distribute 80.1% of the outstanding common stock of Equitrans Midstream to EQT’s shareholders of record as of the close of business on November 1, 2018 (the Record Date). After considering that EQT will retain an additional 19.9% of Equitrans Midstream’s common stock, total Equitrans Midstream shares outstanding after the Distribution are expected to be approximately 255 million shares. EQT announced that it plans to dispose of all its retained Equitrans Midstream common stock, which may include dispositions through one or more subsequent exchanges for debt or a sale of its shares for cash. The Separation is expected to be completed on or around November 13, 2018.
The Separation will result in a change of control of the EQM General Partner, and Equitrans Midstream is expected to enter into new omnibus and secondment agreements with EQM in connection with the Separation. EQM expects that, in connection with the pending Separation, Equitrans Midstream will establish a corporate allocation methodology for capital expenditures and operating expenses related to EQGP and EQM, including non-recurring Separation-related costs and expenses, some of which may be allocated to EQGP and EQM. Equitrans Midstream has disclosed that it is expected to record approximately $65 to $75 million of non-recurring Separation-related expenses, a portion of which will be paid prior to the Separation. The Separation-related expenses consist of approximately $35 to $45 million of expense and $30 million in capital expenditures to relocate and/or augment and create Equitrans Midstream’s, EQGP’s and EQM’s information technology systems in connection with the Separation.
EQT has also announced that it expects the Equitrans Midstream board of directors will evaluate the possible simplification of the midstream structure by addressing the IDRs, although the ultimate decision of whether to propose any such changes will be made by the Equitrans Midstream board of directors following the Separation.
EQT announced that it is transitioning from a business strategy focused on volume growth to one focused on capital efficiency and free cash flow generation. In preparation for the Separation, EQT has been evaluating the long-term pace of development of its Upstream Business in order to achieve the optimal balance between free cash flow generation and volume growth. BasedBolt-on Acquisition.

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See "Critical Accounting Policies and Estimates" included in EQM's Annual Report on this evaluation, EQT announced that it is currently targeting mid-single digit annual production growthForm 10-K for the year ended December 31, 2018 for a discussion of its accounting policies and significant assumptions related to the accounting for goodwill, and EQM's policies and processes with respect to impairment reviews for goodwill. EQM did not identify an impairment indicator related to goodwill during the first quarter of 2019. Management will continue to monitor and evaluate the factors underlying the fair market value of acquired businesses over the next five years.course of the year to determine if any interim assessments are necessary and will take any additional impairment charges required.
Capital Resources and Liquidity
EQM's principal liquidity requirements are to finance its operations, fund capital expenditures, potential acquisitions and other strategic transactions and capital contributions to joint ventures, including the MVP Joint Venture, makepay cash distributions and satisfy any indebtedness obligations. EQM's ability to meet these liquidity requirements will depend on its ability to generate cash in the future as well as its ability to raise capital in banking, capital and other markets. EQM's available sources of liquidity include cash generated from operations, borrowing under EQM's credit facilities, cash on hand, debt offerings and issuanceissuances of additional EQM partnership units.interests. Pursuant to the tax matters agreement between Equitrans Midstream and EQT entered into in connection with the Separation, Equitrans Midstream is subject to certain restrictions related to certain corporate actions, including restrictions related to the issuance of Equitrans Midstream and EQM securities beyond certain thresholds. See “Our general partner may require us to forgo certain transactions in order to avoid the risk of Equitrans Midstream incurring material tax-related liabilities or indemnification obligations under Equitrans Midstream’s tax matters agreement with EQT.” under “Risks Inherent in an Investment in Us” included in “Item 1A. Risk Factors” of EQM's Annual Report on Form 10-K. EQM is not forecasting any public equity issuance for the foreseeable future.currently anticipated organic growth projects.
Operating Activities
Net cash flows provided by operating activities was $865.5were $161.0 million for the ninethree months ended September 30, 2018March 31, 2019 compared to $480.2$284.0 million for the ninethree months ended September 30, 2017.March 31, 2018. The increasedecrease was primarily driven by higher operating income for which contributing factors are discussed in the "Executive Overview" and "Business Segment Resultstiming of Operations" sections herein, partly offset byworking capital payments, including higher interest payments.
Investing Activities
Net cash flows used in investing activities was $2.3 billion for the nine months ended September 30, 2018 compared to $324.9were $350.4 million for the ninethree months ended September 30, 2017.March 31, 2019 compared to $286.5 million for the three months ended March 31, 2018. The increase was primarily attributable to the net assets acquired from EQT in the May 2018 Acquisition, increased capital expenditures as further described in "Capital Requirements" and increased capital contributions to the MVP Joint Venture consistent with the start of construction on the MVP.MVP and MVP Southgate projects.
Financing Activities
Net cash flows provided by financing activities was $1.3 billion for the nine months ended September 30, 2018 compared to net cash used in financing activities of $210.6were $245.7 million for the ninethree months ended September 30, 2017.March 31, 2019 compared to $29.4 million for the three months ended March 31, 2018. For the ninethree months ended September 30,March 31, 2019 and 2018, the primary source of financing cash flows was netwere proceeds from borrowings on EQM's 2018 Senior Notes offering,credit facility, net of repayments, while the primary usesuse of financing cash flows were distributions paid to unitholders, net repayments on credit facilities and the Gulfport Transaction. For the nine months ended September 30, 2017, the primary use of financing cash flows was distributions paid to unitholders and the primary source of financing cash flows was net borrowings on EQM's credit facilities.unitholders.
Capital Requirements
The gathering, transmission and storage and water services businesses are capital intensive, requiring significant investment to develop new facilities and to maintain and upgrade existing operations.
Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,		Three Months Ended 
 March 31,
2018 2017 2018 20172019 
2018(1)
(Thousands)(Thousands)
Expansion capital expenditures (1)(2)
$226,078
 $60,679
 $587,783
 $207,548
$176,509
 $148,077
Ongoing maintenance14,006
 9,815
 29,164
 16,859
Maintenance capital expenditures9,428
 7,365
Total capital expenditures (2)(4)
$240,084
 $70,494
 $616,947
 $224,407
$185,937
 $155,442
(1)EQM's expansion and maintenance capital expenditures have been retrospectively recast to include the pre-acquisition results of the Drop-Down Transaction and the EQM-RMP Merger because these transactions were between entities under common control.
(2)Expansion capital expenditures do not include capital contributions made to the MVP Joint Venture for the MVP and MVP Southgate projects of $263.2$144.8 million and $43.5$117.0 million for the three months ended September 30,March 31, 2019 and 2018, and 2017, respectively, and $446.0respectively.

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(3)Expansion capital expenditures do not include approximately $49.7 million and $103.4 millionof non-operating assets acquired from Equitrans Midstream in the Shared Assets Transaction that primarily support EQM's gathering activities. See Note 2 to the consolidated financial statements for the nine months ended September 30, 2018 and 2017, respectively.further detail.
(2)(4)EQM accrues capital expenditures when the work has been completed but the associated bills have not yet been paid. These accrued amounts are excluded from capital expenditures in the statements of consolidated cash flows until they are paid in a subsequent period. See Note E5 to the consolidated financial statements.
Expansion capital expenditures increased by $165.4$28.4 million for the three months ended September 30, 2018March 31, 2019 compared to the three months ended September 30, 2017 and $380.2 million for the nine months ended September 30,March 31, 2018 comparedprimarily due to the nine months ended September 30, 2017 primarily as a result of capital expenditures on assets acquired in the EQM-RMP Merger and the May 2018 Acquisition as well as increased spending on the Hammerhead project the Equitrans, L.P. Expansion project and various wellhead gathering expansion projects, partly offset by decreased spending on the Range Resources headerprojects.

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pipeline project. The final phase of the Range Resources header pipeline project was placed in-service during the second quarter of 2017.
Ongoing maintenanceMaintenance capital expenditures increased by $4.2$2.1 million for the three months ended September 30, 2018March 31, 2019 compared to the three months ended September 30, 2017 and $12.3 million for the nine months ended September 30,March 31, 2018 compared to the nine months ended September 30, 2017 primarily as a result of higher assets in service and timing of ongoing maintenance projects.
In 2018,For the remainder of 2019, EQM expects to make capital contributions to the MVP Joint Venture are expected to be $0.8of approximately $0.7 billion to $1.0 billion, expansiondepending on the timing of the construction of the MVP and MVP Southgate projects. Expansion capital expenditures are expected to be approximately $875 million$0.9 billion and ongoing maintenance capital expenditures are expected to be approximately $45$56 million, net of reimbursements. EQM's future capital investments may vary significantly from period to period based on the available investment opportunities and the timing of the construction forof the MVP.MVP, MVP Southgate and other projects. Maintenance related capital expenditures are also expected to vary quarter to quarter. EQM mayexpects to fund future capital expenditures primarily through cash on hand, cash generated from operations, availabilityborrowings under its credit facilities, debt offerings and issuanceissuances of additional EQM partnership units. EQM is not forecasting any public equity issuance for the foreseeable future.currently anticipated organic growth projects. EQM does not forecast capital expenditures associated with potential projects that are not committed as of the filing of this Quarterly Report on Form 10-Q.
Credit Facility Borrowings
See Note H9 to the consolidated financial statements for discussion of the credit facilities.
Security Ratings
The table below sets forth the credit ratings for debt instruments of EQM at September 30, 2018.March 31, 2019.
Rating Service Senior Notes Outlook
Moody's Investors Service (Moody's) Ba1 Stable
Standard & Poor's Ratings Services (S&P) BBB- StableNegative
Fitch Ratings (Fitch) BBB- StableNegative
EQM's credit ratings are subject to revision or withdrawal at any time by the assigning rating organization and each rating should be evaluated independently of any other rating. EQM cannot ensure that a rating will remain in effect for any given period of time or that a rating will not be lowered or withdrawn entirely by a credit rating agency if, in its judgment, circumstances so warrant.warrant, including in connection with the MVP project. For example, on March 22, 2019, S&P affirmed
EQM’s BBB- credit rating but revised EQM’s credit rating outlook from stable to negative, citing uncertainty around the
completion of the MVP project, the MVP project’s increased costs and pressure placed on EQM’s credit measures and balance sheet. If any credit rating agency downgrades EQM's ratings, EQM's access to the capital markets may be limited, borrowing costs could increase, EQM may be required to provide additional credit assurances in support of commercial agreements such as joint venture agreements and construction contracts, the amount of which may be substantial, and the potential pool of investors and funding sources may decrease. In order to be considered investment grade, a company must be rated Baa3 or higher by Moody's, BBB- or higher by S&P, or BBB- or higher by Fitch. Anything below these ratings, including EQM's current credit rating of Ba1 by Moody's, isare considered non-investment grade.
Distributions
See Note J11 to the consolidated financial statements for discussion of distributions.
Commitments and Contingencies
In the ordinary course of business, various legal and regulatory claims and proceedings are pending or threatened against EQM.EQM and its subsidiaries. While the amounts claimed may be substantial, EQM is unable to predict with certainty the ultimate outcome of such claims and proceedings. EQM accrues legal and other direct costs related to loss contingencies when actually incurred.

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EQM has establishedestablishes reserves whenever it believes it to be appropriate for pending matters andmatters. Furthermore, after consultation with counsel and giving appropriate consideration toconsidering available insurance, EQM believes that the ultimate outcome of any matter currently pending against it will not materially affect its business, financial condition, results of operations, liquidity or ability to make distributions.
See also "The regulatory approval process for the construction of new midstream assets is challenging, and recent decisions by regulatory and judicial authorities in pending proceedings could impact ourEQM's or the MVP Joint Venture's ability to obtain all approvals and authorizations necessary to complete certain projects on the projected time frame or at all or ourEQM's ability to achieve the expected investment return on the project" under Item 1A, “Risk Factors” of this Quarterlyin EQM’s Annual Report on Form 10-Q10-K for the year ended December 31, 2018 for a discussion of the litigation and regulatory proceedings related to the MVP project.

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Off-Balance Sheet Arrangements
See Note G8 to the consolidated financial statements for discussion ofdiscussions on the MVP Joint Venture guarantee. Following the completion of the Separation, EQM expects the MVP Joint Venture guarantee will be approximately $345 million based on MVP Holdco's share of the estimated remaining MVP construction budget and terms of the agreement.guarantees.
Critical Accounting Policies and Estimates
EQM's critical accounting policies are described in "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in EQM's recast CurrentAnnual Report on Form 8-K10-K for the year ended December 31, 20172018 as filed with the SEC on June 12, 2018.February 14, 2019. Any new accounting policies or updates to existing accounting policies as a result of new accounting pronouncements have been included in the notes to EQM's consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for the period ended September 30, 2018.March 31, 2019. The application of EQM's critical accounting policies may require management to make judgments and estimates about the amounts reflected in the consolidated financial statements. Management uses historical experience and all available information to make these estimates and judgments. Different amounts could be reported using different assumptions and estimates.

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Item 3.  Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
Changes in interest rates affect the amount of interest EQM earns on cash, cash equivalents and short-term investments and the interest rates EQM pays on borrowings under its credit facilities. Changes in interest rates may affect the distribution rate payable on EQM’s Series A Preferred Units after the twentieth distribution period, which could affect the amount of cash EQM has available to make quarterly cash distributions to its other unitholders. EQM's senior notes are fixed rate and thus do not expose EQM to fluctuations in its results of operations or liquidity from changes in market interest rates. Changes in interest rates do affect the fair value of EQM's fixed rate debt. See Note H9 to the consolidated financial statements for discussion of EQM's borrowings and Note I10 to the consolidated financial statements for a discussion of fair value measurements. EQM may from time to time hedge the interest on portions of its borrowings under the credit facilities in order to manage risks associated with floating interest rates.
Credit Risk
EQM is exposed to credit risk, which is the risk that EQM may incur a loss if a counterparty fails to perform under a contract. EQM manages its exposure to credit risk associated with customers through credit analysis, credit approval, credit limits and monitoring procedures. For certain transactions, EQM may request letters of credit, cash collateral, prepayments or guarantees as forms of credit support. EQM's FERC tariffs require tariff customers that do not meet specified credit standards to provide three months of credit support; however, EQM is exposed to credit risk beyond this three-month period when its tariffs do not require its customers to provide additional credit support. For some of EQM's more recent long-term contracts associated with system expansions, it has entered into negotiated credit agreements that provide for enhanced forms of credit support if certain credit standards are not met. EQM has historically experienced only minimal credit losses in connection with its receivables. For the ninethree months ended September 30, 2018,March 31, 2019, approximately 80%84% of revenues were from investment grade counterparties. EQM is exposed to the credit risk of EQT, its largest customer. In connection with EQM's IPO in 2012, EQT guaranteed all payment obligations, up to a maximum of $50 million, due and payable to Equitrans, L.P., EQM's wholly ownedwholly-owned FERC-regulated subsidiary, by EQT Energy, LLC, one of Equitrans, L.P.'s largest customers and a wholly ownedwholly-owned subsidiary of EQT.EQT, which guaranty is in effect as of March 31, 2019. The EQT guaranty will terminate on November 30, 2023 unless terminated earlier by EQT upon 10 daysdays' written notice. At September 30, 2018,March 31, 2019, EQT's public senior debt had an investment grade credit rating.
Commodity Prices
EQM's business is dependent on the continued availability of natural gas production and reserves in its areas of operation. Low prices for natural gas, including those resulting from regional basis differentials, could adversely affect development of additional reserves and production that is accessible by EQM's pipeline and storage assets, or lower drilling activity, which would decrease demand for EQM's water services. Lower regional natural gas prices could cause producers to determine in the future that drilling activities in areas outside of EQM's current areas of operation are strategically more attractive to them. EQT, or third partyEQM's customers on EQM's systems, may reduce capital spending in the future based on commodity prices or other factors. Unless EQM is successful in attracting and retaining unaffiliated third partynew customers, which accounted for 20% of gathering revenues, 45% of transmission and storage revenues and 7% of water service revenues for the nine months ended September 30, 2018, its ability to maintain or increase the capacity subscribed and volumes transported under service arrangements on its transmission and storage system, the volumes gathered on its gathering systems, or the volumes of water provided by its water service business will be dependent on receiving consistent or increasing commitments from its existing customers, including EQT. While EQT has dedicated acreage to EQM and has entered into long-term firm transmission and gathering contracts on certain EQMEQM's systems, EQT may determine in the future that drilling in EQM's areas of operations doesis not provide an adequate returneconomical or that

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drilling in areas outside of EQM's current areas of operations is strategically more attractive to it. EQT is under no contractual obligation to continue to develop its acreage dedicated to EQM.
ForEQM maintains a stable cash flow profile, with over 50% of its revenue for the yearthree months ended DecemberMarch 31, 2017, approximately 84% of EQM’s total revenues were derived from2019 generated by firm reservation fees. On a pro forma basis following the closing of the EQM-RMP Merger, approximately 60% of EQM’s total revenues would have been derived from firm reservation fees for the year ended December 31, 2017. This decrease is primarily driven by the fact that RMP’s gathering systems have not been supported by contracts with firm capacity reservation components. Rather, all of RMP’s gathering and compression revenues were generated under long-term contracts which provide for a fixed price per unit for volumes of natural gas actually gathered. As a result, following the EQM-RMP Merger, EQM has greater exposure to short and medium-term declines in volumes of gas produced and gathered on its systems than it has historically. With respect to its firm contracts, EQM believes that shortshort- and medium-term declines in volumes of gas produced, gathered, transported or stored on its systems will not have a limitedsignificant effect on its results of operations, liquidity, financial impact on EQMposition or ability to pay quarterly cash distributions because thethese firm reservation fees associated with these contracts are paid regardless of volumes supplied to the system by customers. Longer term price declines could have an impactadverse effect on customer creditworthiness and related ability to pay firm reservation fees under long-term contracts which could impactaffect EQM's results of operations, liquidity or financial position or ability to pay distributions to its unitholders.position. Additionally, long-term declines in gas production in EQM's areas of operations would limit EQM'sits growth potential.
Other Market Risks
EQM's $1$3 Billion Facility is underwritten by a syndicate of 21 financial institutions, each of which is obligated to fund its pro-rata portion of any borrowings by EQM. No one lender of the financial institutions in the syndicate holds more than 10% of the facility. EQM's large syndicate group and relatively low percentage of participation by each lender is expected to limit EQM's exposure to disruption or consolidation in the banking industry.

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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of management of the EQM General Partner,EQM's general partner, including the EQM General Partner's Principal Executive Officer and Principal Financial Officer of EQM's general partner, an evaluation of EQM's disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)) was conducted as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer of the EQM General PartnerEQM's general partner concluded that EQM's disclosure controls and procedures were effective as of the end of the period covered by this report.
Changes in Internal Control over Financial Reporting
Management’s assessment of, and conclusion on, the effectiveness of internal control over financial reporting did not include the internal controls of the entities acquired in the May 2018 Acquisition, which were initially acquired by EQT from Rice on November 13, 2017. Under guidelines established by the SEC, companies are permitted to exclude acquisitions from their assessment of internal control over financial reporting for a period of up to one year following an acquisition while integrating the acquired company. EQM is in the process of integrating its internal controls over financial reporting with those of the entities acquired in the May 2018 Acquisition. As a result of these integration activities, certain controls will be evaluated and may be changed. Except as noted above, thereThere were no changes in EQM's internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that occurred during the thirdfirst quarter of 20182019 that have materially affected, or are reasonably likely to materially affect, EQM's internal control over financial reporting.


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PART II.  OTHER INFORMATION
Item 1. Legal Proceedings
In the ordinary course of business, various legal and regulatory claims and proceedings are pending or threatened against EQM.EQM and its subsidiaries. While the amounts claimed may be substantial, EQM is unable to predict with certainty the ultimate outcome of such claims and proceedings. EQM accrues legal and other direct costs related to loss contingencies when actually incurred. EQM has establishedestablishes reserves whenever it believes it to be appropriate for pending matters andmatters. Furthermore, after consultation with counsel and giving appropriate consideration toconsidering available insurance, EQM believes that the ultimate outcome of any matter currently pending against itEQM will not materially affect its business, financial condition, results of operations, liquidity or ability to make distributions.distributions to EQM unitholders.
Environmental Proceedings
Consent Orders, Beta Pipeline Project, Greene County, PA, and Barracuda Pipeline Project, Washington County, PA. The Pennsylvania Department of Environmental Protection (PADEP) issued multiple notices of violation (NOVs) to EQM related to the Beta Pipeline Project for construction, sediment and erosion control issues and failure to implement required corrective actions during the period of November 2017 to April 2018. The PADEP also issued multiple NOVs to EQM related to a sediment slip in mid-2018 on the Barracuda Pipeline Project that impacted a surface water stream. EQM and the PADEP reached a settlement in which EQM agreed to pay a collective amount of $1.6 million for both matters and conduct required corrective actions. All amounts have been paid and consent orders signed with the PADEP.
Administrative Order, Swarts Storage Field, Greene County, PA. On December 26, 2018, EQM received an administrative order from the PADEP alleging non-compliance with certain regulations and failure to submit required information regarding encroaching mining operations in the storage field and authorizing the PADEP to shut down the storage field. EQM believes that it has substantially complied with the regulations, has complied with the PADEP information requests, and objects to the factual foundations of the administrative order. On January 10, 2019, the PADEP issued a letter suspending the portion of the administrative order that purported to authorize the PADEP to shut down the storage field. The administrative order does not contain a penalty assessment; however, resolution of the matter may include imposition of operational constraints. On January 25, 2019, EQM filed an administrative appeal on the PADEP's order to preserve its rights in any future proceedings. No reserve has been established for this matter.
Consent Order, Legacy Ohio Pipeline - Multiple Locations in Ohio. The Ohio Environmental Protection Agency (OEPA) has issued NOVs to EQM that encompass fill violations and/or storm water (sedimentation) violations incurred during the ownership of the Legacy Ohio pipeline by EQM's predecessor entities. The NOVs allege violations related to state storm water permits and state and federal clean water laws. EQM addressed the violations with agency oversight and cooperated with the OEPA to proactively address future corrective actions. EQM has agreed to pay $300,000 and all amounts have been paid and consent orders signed with the OEPA.
MVP Matters
The MVP Joint Venture is currently defending certain agency actions and judicial challenges to the MVP project that must be resolved favorably before the project can be completed, including the following:
Sierra Club, et al. v. U.S. Army Corps of Engineers, et al., consolidated under Case No. 18-1173, Fourth Circuit Court of Appeals (Fourth Circuit). In February 2018, the Sierra Club filed a lawsuit in the Fourth Circuit Court of Appeals challengingagainst the use of U.S. Army Corps of Engineers (the U.S. Army Corps). The lawsuit challenges the verification by the Huntington District of the U.S. Army Corps that Nationwide Permit 12, which generally authorizes discharges of dredge or fill material into waters of the United States and the construction of pipelines across such waters under Section 404 of the Clean Water Act, could be utilized in the Huntington District (which covers all but the northernmost area of West VirginiaVirginia) for the MVP project. In MayThe crux of Sierra Club's position was that the MVP Joint Venture, pursuant to its FERC license, planned to use a certain methodology (dry open cut creek crossing methodology) to construct the pipeline across streams in West Virginia that would take considerably longer than the 72 hours allowed for such activities pursuant to the terms of West Virginia's Clean Water Act Section 401 certification for Nationwide Permit 12. A three-judge panel of the Fourth Circuit agreed with the Sierra Club and on October 2, 2018, issued a preliminary order stopping the construction in West Virginia of that portion of the pipeline that is subject to Nationwide Permit 12. Following the issuance of the court's preliminary order, the U.S. Army Corps suspended itsCorps' Pittsburgh District (which had also verified use of Nationwide Permit 12 verifications for four river crossingsby MVP in the northern corner of West Virginia. Plaintiffs then sought a preliminary injunction stayingVirginia) suspended its verification that allowed the Army Corps' approvalMVP Joint Venture to proceed underuse Nationwide Permit 12 for all stream and wetlands crossings in northern West Virginia, arguing thatVirginia. On November 27, 2018, the project could not meet oneFourth Circuit panel issued its final decision vacating the Huntington District's verification of the express conditionsuse of Nationwide Permit 12 in West Virginia. As a consequence, unless and until West Virginia limiting the duration of stream crossings. In June 2018, the Fourth Circuit granted the motion and stayed the Army Corps' verification thatrevises its Section

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401 certification for Nationwide Permit 12 could be used to authorize stream crossings in West Virginia. Accordingly,(an administrative process presently underway as described below) and the U.S. Army Corps Huntington and Pittsburgh Districts re-verify the MVP Joint Venture's use of Nationwide Permit 12, or the MVP Joint Venture temporarily stopped constructionsecures an individual Section 404 permit with the concurrence of the portions ofboth Districts, the MVP project affected by this ruling. The Army Corps reinstated its verifications for four of the West Virginia stream crossingsJoint Venture cannot perform any construction activities in July 2018,any streams and then moved for the Fourth Circuit to lift the stay. The court granted the Army Corps' motion, on August 28, 2018, and lifted its stay. Following the court's ruling, MVP has resumed construction of the portions of the MVP affected by the stay. On October 2, 2018, the Fourth Circuit issued a preliminary order vacating the Army Corps’ Nationwide Permit 12 authorizationswetlands in West Virginia. As a result ofThe administrative proceeding described below is addressing the preliminary order, MVP cannot perform construction activities in waters and wetlands along the 160 mile route that is coveredissues raised by the Huntington District. In August,Court.
WVDEP Rulemaking Proceedings – Section 401 Nationwide Permit. On April 13, 2017, the West Virginia Department of Environmental Protection (WVDEP) issued a 401 Water Quality Certification for the U.S. Army Corps Nationwide Permits. In August 2018, the WVDEP initiated a regulatoryan administrative process to revise West Virginia’s Clean Water Act Section 401 Certificationthis certification and requested public comment to, among other things, specifically revise the 72-hour limit for stream crossings noted as problematic by the Fourth Circuit as well as other conditions. The WVDEP issued a new notice and comment period for further modifications of the 401 certification. This notice and comment period ended on March 4, 2019. The full administrative process requires notice and opportunity for public comment, response to public comment, and adherence to the state's administrative procedures legislation. The WVDEP is also required to obtain the EPA's agreement to the modified 401 certification. Assuming that the WVDEP's administrative process results in the clarification or elimination of any problematic conditions, and the EPA's agreement is secured, the MVP Joint Venture anticipates that it will once again secure from the U.S. Army Corps Nationwide Permit. Upon receipt of West Virginia’s final revised 401 Certification of the Nationwide Permit, MVP anticipates that the Corps will initiate its regulatory process to republish the Nationwide Permit forDistricts within West Virginia verification that will incorporate West Virginia’s revised 401 Certification. Once the Nationwide Permit is reissued, MVP will reapply for theits activities, including stream crossings, may proceed under Nationwide Permit 12 verification. MVP expects to receive the revised Nationwide Permitas re-certified by the endWVDEP. The MVP Joint Venture expects that reverification to occur within the first half of 2019. The notice and comment period ended on March 4, 2019. On April 24, 2019, the WVDEP submitted the modification to the EPA for approval and provided notice to the U.S. Army Corps. However, the MVP Joint Venture cannot guarantee that the agenciesEPA or the U.S. Army Corps Districts will act promptly or be deemed to have acted properly if challenged, in a timely manner or thatwhich case re-verification may be delayed past the action will not be challenged.first half of 2019.
Sierra Club, et al. v. U.S. Army Corps of Engineers et al., Case No. 18-1713, Fourth Circuit Court of Appeals. In June 2018, following the Fourth Circuit's West Virginia decision, the Sierra Club filed a second petition in the Fourth Circuit against the U.S. Army Corps, seeking review and a stay of the U.S. Army Corps'Corps Norfolk District's decision to grant authorization underverify the MVP Joint Venture's use of Nationwide Permit 12 for stream crossings in Virginia. The courtFourth Circuit denied the Sierra Club's request for a stay on August 28, 2018. On October 5, 2018, the U.S. Army Corps’Corps' Norfolk District suspended its authorizationsverification under Nationwide Permit 12 for stream and waterbody crossings in Virginia pending the resolution of the West Virginia proceedings outlined above. On December 10, 2018, the U.S. Army Corps filed a motion to place the case in abeyance which the court granted on January 9, 2019. Until the U.S. Army Corps lifts its suspension, the MVP Joint Venture cannot perform any construction activities in any streams and wetlands in Virginia.
Sierra Club, et al. v. U.S. Forest Service, et al., consolidated under Case No. 17-2399, Fourth Circuit matter regarding Nationwide Permit 12 authorizations in the Army Corps’ Huntington District.
On October 19, 2018, in response to the Nationwide Permit 12 verification suspensions in the Army Corps’ Huntington and Norfolk Districts, the Army Corps’ Pittsburgh District suspended its authorizations under Nationwide Permit 12 for stream and wetlands crossings in northern West Virginia.
Court of Appeals. In a different Fourth Circuit lawsuitappeal filed in December 2017, the Sierra Club challenged a Bureau of Land Management (the BLM)(BLM) decision to grant a right-of-way to the MVP Joint Venture and a U.S. Forest Service (the USFS)(USFS) decision to amend its management plan to accommodate MVP, both affectingof which affect the MVP's 3.6-mile segment in the Jefferson National Forest in Virginia. On July 27, 2018, agreeing in part with the courtSierra Club, the Fourth Circuit vacated the BLM and USFS decisions, finding fault with the USFS' analysis of erosion and sedimentation effects and the BLM's analysis of the practicality of alternate routes. On August 3, 2018, citing the court's vacatur and remand, the FERC issued a stop work order for the entire pipeline pending the agency actions on remand. The FERC modified its stop on work order on August 29, 2018 to allow work to continue on all but approximately 25 miles of the project. The MVP Joint Venture has resumed construction of the affectedthose portions of the pipeline.
On October 10, 2018, the Fourth Circuit granted MVP’sa petition for rehearing filed by the MVP Joint Venture for the limited purpose of clarifying that the July 27, 2018, order did not vacate the portion of the BLM’sBLM's Record of Decision authorizing a right-of-way and temporary use permit for MVP to cross the Weston and Gauley Bridge Turnpike Trail in Braxton County, West Virginia. On October 15, 2018,

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the MVP Joint Venture filed with the FERC a request to further modify the August 3, 2018 stop work order to allow the MVP Joint Venture to complete the bore and install the pipeline under the Weston and Gauley Bridge Turnpike Trail. ThisOn October 24, 2018, the FERC granted the MVP Joint Venture's request to further modify the stop work order and authorize construction. The MVP Joint Venture has resumed construction of those portions of the pipeline. However, work on the 3.6-mile segment in the Jefferson National Forest must await a revised authorization, which the MVP Joint Venture is currently pending.working to obtain.
Challenges to FERC Certificate, Court of Appeals for the District of Columbia Circuit (DC Circuit). Multiple parties have sought judicial review of the FERC's order issuing certificatesa certificate of convenience and necessity to the MVP Joint Venture and/or the exercise by the MVP Joint Venture of eminent domain authority. There are multiple consolidated petitions before the Court of Appeals for the District of ColumbiaDC Circuit seeking direct review of the FERC order under the Natural Gas Act.Act in Appalachian Voices, et al. v. FERC, et al., consolidated under Case No. 17-1271. Those petitioners have requested a stay of the FERC's order pending the resolution of the petitions, which the FERC and the MVP Joint Venture have opposed. The Court of Appeals DC Circuit

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denied the request for a stay on August 30, 2018. Briefing onOn February 19, 2019, the meritsDC Circuit issued an order rejecting the challenges to the FERC’s order issuing a certificate of convenience and necessity to the MVP Joint Venture and certain challenges to the exercise by MVP of eminent domain authority. No petitions for review is scheduled to be completedrehearing or petitions for rehearing en banc were filed by December 2018.the April 5, 2019 deadline. The mandate was issued on April 17, 2019. Another group of parties filed a complaint in the U.S. District Court for the District of Columbia asserting that the FERC's order issuing certificates is unlawful on constitutional and other grounds.grounds in Bold Alliance, et al. v. FERC, et al., Case No. 1:17-cv-01822-RJL. The district court plaintiffs seek declaratory relief as well as an injunction preventing the MVP Joint Venture from developing its project or exercising eminent domain authority. In December 2017 and January 2018, the FERC and the MVP Joint Venture, respectively, moved to dismiss the petitions for lack of subject matter jurisdiction. The court granted the motion and dismissed this complaint on September 28, 2018. On October 26, 2018, plaintiffs appealed to the DC Circuit in Bold Alliance, et al. v. FERC, et al., Case No. 18-5322. On December 3, 2018, the FERC, as appellee, filed a joint motion with the appellants to hold Case No. 18-5322 in abeyance pending completion of the ongoing appeals of the final agency orders related to the MVP certificate in consolidated Case No. 17-1271 and Atlantic Coast Pipeline’s certificate. The MVP Joint Venture filed a motion to dismiss the case as to some of the plaintiffs. On February 15, 2019, the DC Circuit entered an order holding this appeal in abeyance pending rulings on the appeals from the FERC proceedings. If this challenge were successful, it could result in the MVP Joint Venture's certificate of convenience and necessity being vacated and/or additional proceedings before the FERC, the outcome of which EQM cannot predict.
Mountain Valley Pipeline, LLC v. 6.56 Acres of Land et al., Case No. 18-1159, Fourth Circuit Court of Appeals.Several landowners have filed challenges in various U.S. District Courts to the condemnation proceedings by which the MVP Joint Venture obtained access to their property. In each case, the district court found that the MVP Joint Venture was entitled to immediate possession of the easements, and the landowners appealed to the Fourth Circuit. The Fourth Circuit has consolidated these cases and held oral argument in September 2018. The court has not yetOn February 5, 2019, the Fourth Circuit issued a decision. If one or morean opinion affirming the decisions of these challenges is successful, it could preventthe U.S. District Courts granting the MVP Joint Venture from constructing all or a portionimmediate access for construction of the pipeline or requirepipeline. On March 15, 2019, the Fourth Circuit issued another opinion finding that the MVP Joint Venture did not have to seek an alternate route forcondemn the pipeline or a portion thereof, which could require additional regulatory proceedings before the FERC and other interested federal and state agencies, the outcomeinterest of which we cannot predict. A successful challenge could also increase the cost of obtaining necessary rights of waycoal owners, nor are coal owners entitled to construct and operate the pipeline. 
In November 2017,assert claims in the wakecondemnation proceedings for lost coal on tracts for which they do not own a surface interest being condemned.
Greenbrier River Watershed Ass’n v. WVDEP, Circuit Court of FayetteSummers County, West Virginia's denial of the MVP Joint Venture's rezoning request to permit construction of a compressor station, the MVP Joint Venture brought suit in the U.S. District Court for the Southern District of West Virginia seeking a judgment declaring that the County's denial was preempted by federal law and a permanent injunction preventing the county from enforcing the zoning constraint with respect to the MVP project. The MVP Joint Venture filed a motion for summary judgment in February 2018. The court granted MVP's motion for summary judgment and dismissed the complaint on August 29, 2018. The county has the right to appeal the district court's decision. 
Virginia.In August 2017, the Greenbrier River Watershed Association appealed the MVP project'sJoint Venture's Natural Stream Preservation Act Permit obtained from the West Virginia Environmental Quality Board (the WVEQB)(WVEQB) for the Greenbrier River crossing. Petitioners alleged that the issuance of the permit failed to comply with West Virginia's Water Quality Standards for turbidity and sedimentation. WVEQB dismissed the appeal in June 2018. In July 2018, the Greenbrier River Watershed Association appealed the decision to the Circuit Court of Summers County, asking the court to remand the permit with instructions to impose state-designated construction windows and pre- and post-construction monitoring requirements as well as a reversal of the WVEQB's decision that the permit was lawful. On September 18, 2018, the Circuit Court granted a stay pending appeal.stay. A hearing on the merits is scheduled forwas held on October 23, 2018, and the2018. The court has requested expedited briefing.not yet issued a decision. In the event of an adverse decision, the MVP Joint Venture would appeal or work with the West Virginia Department of Environmental ProtectionWVDEP to attempt to resolve the issues identified by the court.
WVDEP Consent Order. On March 19, 2019, the West Virginia DEP (WVDEP) issued 26 notices of violation to MVP for various construction and sediment and erosion control issues in 2018. MVP and WVDEP have reached a tentative settlement agreement which will be documented as an administrative consent order for MVP to pay $0.3 million in penalties. Upon execution, the consent order will be subject to a state mandated 30-day public comment period. In addition to payment of assessed penalties, MVP is required to submit a corrective action plan to resolve any outstanding permit compliance matters.
Sierra Club et al. v. U.S. Dep’t of Interior et al., Case No. 18-1082, Fourth Circuit Court of Appeals. On August 6, 2018, the Fourth Circuit held that National Park Service (NPS) acted arbitrarily and capriciously in granting the Atlantic Coast Pipeline (ACP) a right-of-way permit across the Blue Ridge Parkway. Specifically, the Fourth Circuit found that the permit cited the wrong source of legal authority and the NPS failed to make a “threshold determination that granting the right-of-way is ‘not inconsistent with the use of such lands for parkway purposes’ and the overall National Park System to which it belongs.” Even though MVP is not named in the ACP litigation, the MVP route crosses the Blue Ridge Parkway roughly midway between mileposts 246 and 247 of the pipeline route and implicates some the same deficiencies addressed by the Court. MVP elected to request that the NPS temporarily suspend its Blue Ridge Parkway permit until the deficiencies identified in the ACP litigation are resolved. While the MVP and ACP rights-of-way share some of the same regulatory issues, unlike ACP the portion of the MVP pipeline that crosses the Blue Ridge Parkway is completely constructed. NPS granted MVP the ability to continue final restoration efforts on

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that portion of the pipeline during the course of the suspended permit. MVP is working with the NPS to address MVP-related right-of-way issues.

Other Proceedings that May Affect the MVP Project
Cowpasture River Preservation Association, et al. v. U.S. Forest Service, et al., Case No. 18-1144, Fourth Circuit Court of Appeals. On December 13, 2018, in an unrelated case involving the Atlantic Coast Pipeline, the Fourth Circuit held that the Forest Service, which is part of the Department of Agriculture, lacked the authority to grant rights-of-way for oil and gas pipelines to cross the Appalachian Trail. Although the MVP Joint Venture obtained its grant to cross the Appalachian Trail from the BLM, a part of the Department of Interior, the rationale of the Fourth Circuit's opinion could apply to the BLM as well. On February 25, 2019, the Fourth Circuit denied Atlantic Coast Pipeline’s petition for en banc rehearing. The MVP Joint Venture anticipates that the Atlantic Coast Pipeline will file an appeal with the United States Supreme Court. The MVP Joint Venture is pursuing multiple options to address the Appalachian Trail issue, including but not limited to, administrative and legislative options.
Grand Jury Subpoena. On January 7, 2019, the MVP Joint Venture received a letter from the U.S. Attorney's Office for the Western District of Virginia stating that it and the EPA are investigating potential criminal and/or civil violations of the Clean Water Act and other federal statutes as they relate to the construction of the MVP. The January 7, 2019 letter requested that the MVP Joint Venture and its members, contractors, suppliers and other entities involved in the construction of the MVP preserve documents related to the MVP generated from September 1, 2018 to the present. In a telephone call on February 4, 2019, the U.S. Attorney's Office confirmed that it has opened a criminal investigation. On February 11, 2019, the MVP Joint Venture received a grand jury subpoena from the U.S. Attorney's Office for the Western District of Virginia requesting certain documents related to the MVP from August 1, 2018 to the present. The MVP Joint Venture is complying with the letter and subpoena but cannot predict whether any action will ultimately be brought by the U.S. Attorney's Office or what the outcome of such an action would be. The MVP Joint Venture began a rolling production of documents responsive to the subpoena after the U.S. Attorney’s office narrowed its subpoena inquiry to five farms in Virginia containing 20 streams or wetlands.
Paylor et al. v. Mountain Valley Pipeline, LLC, Case No. CL18-4874-00, Circuit Court of Henrico County. On December 7, 2018, the Virginia Department of Environmental Quality and the State Water Control Board filed a lawsuit against the MVP Joint Venture in the Circuit Court of Henrico County alleging violations of Virginia's State Water Control Law, Water Resources and Wetlands Protection Program, and Water Protection Permit Program Regulations at sites in Craig, Franklin, Giles, Montgomery and Roanoke Counties, Virginia. The MVP Joint Venture answered the suit on January 11, 2019, stating that it does not admit and will contest the allegations. The MVP Joint Venture has initiated settlement negotiations to resolve this matter. The MVP Joint Venture anticipates that a resolution could result in penalties and injunctive relief designed to assure compliance with relevant environmental laws and regulations. Shortly after the filing of this suit, the Virginia State Water Control Board (VSWCB) voted to reconsider/schedule a hearing to revoke MVP's Clean Water Act Section 401 certification. On March 1, 2019, the VSWCB voted unanimously to end its consideration of whether to revoke MVP’s Clean Water Act Section 401 Certification.
Item 1A. Risk Factors
There have been no material changes from the risk factors previously disclosed in EQM's Annual Report on Form 10-K for the year ended December 31, 20172018 other than the risks described below.
FailureWe have entered into joint ventures, and may in the future enter into additional or modify existing joint ventures, that might restrict our operational and corporate flexibility. In addition, these joint ventures are subject to successfully combinemany of the businessessame operational risks to which we are subject.
We have entered into joint ventures to construct the MVP and MVP Southgate projects and a joint venture relating to Eureka Midstream Holdings, LLC and may in the future enter into additional joint venture arrangements with third parties. Joint venture arrangements may restrict our operational and corporate flexibility. Because we do not control all of the decisions of the MVP Joint Venture or the joint venture relating to Eureka Midstream Holdings, LLC, it may be difficult or impossible for us to cause the joint venture to take actions that we believe would be in our or the joint venture's best interests. For example, we cannot unilaterally cause the distribution of cash by the MVP Joint Venture. Moreover, joint venture arrangements involve various risks and uncertainties, such as committing us to fund operating and/or capital expenditures, the timing and amount of which we may not control, and our joint venture partners may not satisfy their financial obligations to the joint venture.
In addition, the operations of the MVP Joint Venture, the joint venture relating to Eureka Midstream Holdings, LLC and any joint ventures we may enter into in the future are subject to many of the same operational risks to which we are subject to.

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A downgrade of our credit ratings, including in connection with the MVP project, which are determined by independent third parties, could impact our liquidity, access to capital, and costs of doing business.
If any credit rating agency downgrades our credit ratings, including for reasons relating to the MVP project, our access to credit markets may be limited, our borrowing costs could increase, and we may be required to provide additional credit assurances in support of commercial agreements, such as joint venture agreements and construction contracts, the amount of
which may be substantial. Our credit ratings by Moody's, S&P and Fitch were Ba1, BBB- and BBB-, respectively, as of
March 31, 2019. On March 22, 2019, S&P affirmed our BBB- credit rating but revised our credit rating
outlook from stable to negative, citing uncertainty around the completion of the MVP project, the MVP project’s increased
costs and pressure placed on our credit measures and balance sheet. In order to be considered investment grade,
we must be rated Baa3 or higher by Moody's, BBB- or higher by S&P and BBB- or higher by Fitch. Our non-investment
grade credit rating by Moody's and any future downgrade of our S&P and/or Fitch credit ratings to non-investment grade
may result in greater borrowing costs and collateral requirements than would be available to us if of all our credit ratings were investment grade. Our ability to access capital markets could also be limited by economic, market or other disruptions. An increase in the level of our indebtedness in the future may result in a downgrade in the ratings that are assigned to our debt. Credit rating agencies perform an independent analysis when assigning credit ratings. This analysis includes a number of
criteria such as business composition, market and operational risks, as well as various financial tests. Credit rating agencies
continue to review the criteria for industry sectors and various debt ratings and may make changes to those criteria from time to
time. Credit ratings are subject to revision or withdrawal at any time by the ratings agencies.
Our Series A Preferred Units have rights, preferences and privileges that are not held by, and are preferential to the rights of, holders of EQM common units.
Our Series A Perpetual Convertible Preferred Units representing limited partner interests in EQM (our “Series A Preferred Units”) rank senior to our common units with respect to distribution rights and RMP in the expected time frame mayrights upon liquidation. These preferences could adversely affect the future resultsmarket price for our common units or could make it more difficult for us to sell our common units in the future.
In addition, until the conversion of the combined organization and our ability to achieve the intended benefitsSeries A Preferred Units into common units or their redemption in connection with a change of control, holders of the EQM-RMP MergerSeries A Preferred Units will receive cumulative quarterly distributions initially at a fixed rate of $1.0364 per Series A Preferred Unit per quarter for the first twenty distribution periods (the “initial distribution period”) and thereafter at a floating rate based on a spread to the May 2018 Acquisition.
The success3-month LIBOR as of the EQM-RMP Mergersecond banking day prior to the beginning of the applicable distribution period. We will depend, in part,not be entitled to pay any distributions on any junior securities, including any of the common units, prior to paying the quarterly distribution payable on the Series A Preferred Units, including any previously accrued and unpaid distributions. In addition, because the distribution rate on our ability to realizeSeries A Preferred Units will become a floating rate following the anticipated benefits from combining the businesses of EQM and RMP. To realize these anticipated benefits, the businesses must be successfully combined. If the combined organization is not able to achieve these objectives, or is not able to achieve these objectives on a timely basis, the anticipated benefits of the EQM-RMP Merger may not be realized fully or at all. In addition, the actual integration may result in additional and unforeseen expenses, which could reduce the anticipated benefits of the EQM-RMP Merger. There can be no assurance that our combination with RMP or the May 2018 Acquisition will deliver the strategic, financial and operational

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benefits anticipated by us. Our business may be negatively impacted ifinitial distribution period, we are unable to effectively managepredict the amount of such distributions. Our obligation to pay distributions on our expanded operations.
The proposed separation of EQT's production and midstream businesses into two independent publicly-traded companies may result in disruptions to, and negativelySeries A Preferred Units could impact our relationships with, our customersliquidity and reduce the amount of cash flow available for working capital, capital expenditures, growth opportunities, acquisitions and other business partners, and we may incur significant non-recurring and ongoing costs following the Separation relatedgeneral partnership purposes. Our obligations to the change in control of our and EQGP’s general partners.
On October 24, 2018, EQT announced that its board of directors approved the completionholders of the separation of EQT’s upstream and midstream businesses, creating a standalone publicly traded corporation, Equitrans Midstream Corporation (Equitrans Midstream), that will focus on midstream operations. Following the Separation, Equitrans Midstream will own the midstream interests held by EQT, including EQT’s interests in us and EQGP.  Uncertainty relatedSeries A Preferred Units could also limit our ability to the Separation may lead customers and other parties withobtain additional financing or increase our borrowing costs, which we currently do business, or may do business in the future, to terminate or attempt to negotiate changes in existing business relationships or consider entering into business relationships with parties other than us. In addition, following the Separation, it is possible that our relationship with Equitrans Midstream as our and EQGP’s sponsor may be different from the current relationship that we have with EQT as our sponsor as a result of a number of potential differences between Equitrans Midstream and EQT, including a more narrow operational and business focus, different assets and liability structure at the sponsor level, different allocations of employee resources and different corporate allocation methodologies for capital expenditures and operating expenses.  These disruptions and changes could have a material andan adverse effect on our business, financial condition, resultscondition.
The terms of operations and prospects.
Our significant indebtedness, and any future indebtedness, as well as the restrictions under our debt agreements could adversely affectSeries A Preferred Units contain covenants that may limit our business financial condition and operating flexibility, resultsflexibility.
The terms of operations, liquidity and abilityour Series A Preferred Units contain covenants preventing us from taking certain actions without the approval of the holders of two-thirds (662/3%) of the outstanding Series A Preferred Units, voting as a separate class. The need to make quarterly cash distributions to our unitholders.
Our debt agreements contain various covenants and restrictive provisions that limitobtain the approval of holders of the Series A Preferred Units before taking these actions could impede our ability to take certain actions that management or the Board of Directors of the EQM general partner may consider to be in the best interests of our unitholders.
The affirmative vote of two-thirds (662/3%) of the outstanding Series A Preferred Units, voting as a separate class, is necessary to, among other things:
incurthings, (i) amend our partnership agreement or guaranteecertificate of limited partnership in any manner that is adverse (other than in a de minimis manner) to any of the rights, preferences and privileges of the Series A Preferred Units, (ii) issue any additional debt;
makeSeries A Preferred Units or any class or series of partnership interests that, with respect to distributions on such partnership interests or redeemdistributions in respect of such partnership interests upon our liquidation, dissolution and winding up, rank equal to or repurchase units;senior to the Series A Preferred Units, subject to certain exceptions, (iii) reduce the distribution amount applicable to the Series A Preferred Units, change the form of payment of distributions on the Series A Preferred Units, defer the date from which distributions on the Series A Preferred Units will accrue, cancel any accrued and unpaid distributions on the Series A Preferred Units or any interest accrued thereon (including any unpaid distributions or partial distributions on the Series A Preferred Units), or change the seniority rights of the Series A Preferred Units as to the payment of distributions in relation to the holders of any other class or series of partnership interests in EQM, (iv) reduce the amount payable or change the
incur
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form of payment to the record holders of the Series A Preferred Units upon the voluntary or permit liens on assets;
enter into certain types of transactions with affiliates;
enter into certain mergersinvoluntary liquidation, dissolution or acquisitions; and
disposewinding up, or sale of all or substantially all of the assets, of EQM, or change the seniority of the liquidation preferences of the record holders of the Series A Preferred Units in relation to the rights of the holders of any other class or series of partnership interests in EQM upon the liquidation, dissolution and winding up of EQM or (v) make the Series A Preferred Units redeemable or convertible at the option of EQM other than as set forth in our assets.partnership agreement.
Upon conversion of our Series A Preferred Units, holders may receive less valuable consideration than expected because the value of our common units may decline after such holders exercise their conversion right but before we settle our conversion obligation.
Each holder of our Series A Preferred Units may elect to convert all or any portion of the Series A Preferred Units owned by it into our common units initially on a one-for-one basis, subject to customary anti-dilution adjustments and an adjustment for any distributions that have accrued but not been paid when due and partial period distributions (referred to as the “conversion rate”), at any time (but not more often than once per fiscal quarter) after April 10, 2021 (or upon our earlier liquidation, dissolution or winding up), provided that any conversion is for at least $30 million (calculated based on the closing price of our common units on the trading day preceding notice of the conversion) or such lesser amount if such conversion relates to all of a holder’s remaining Series A Preferred Units.
EQM may elect to convert all or any portion of the Series A Preferred Units into common units at any time (but not more often than once per quarter) after April 10, 2021 if (i) the common units are listed for, or admitted to, trading on a national securities exchange, (ii) the closing price per common unit on the national securities exchange on which the common units are listed for, or admitted to, trading exceeds $68.28 for the 20 consecutive trading days immediately preceding notice of the conversion, (iii) the average daily trading volume of the common units on the national securities exchange on which the common units are listed for, or admitted to, trading exceeds 500,000 common units for the 20 consecutive trading days immediately preceding notice of the conversion, (iv) we have an effective registration statement on file with the SEC covering resales of the common units to be received by such holders upon any such conversion and (v) we have paid all accrued quarterly distributions in cash to the holders.
Any conversion of Series A Preferred Units to common units, whether at the holders’ election or at our election, would increase the number of common units outstanding, which in turn may impact the amount of any distributions paid in respect of the common units.
In July 2017, we amended and restatedaddition, converting holders of our credit facilitySeries A Preferred Units will be exposed to increase the borrowing capacity under the facility from $750 million to $1 billion and extend the maturity date to July 2022. In addition, we expect to increase our borrowing capacity under the revolver to up to $3 billionfluctuations in the fourth quartervalue of 2018. our common units during the period from the date such holder surrenders Series A Preferred Units for conversion until the date we settle our conversion obligation. Upon conversion, we will be required to deliver our common units no later than two business days (in the case of a conversion initiated by the holders) or five business days (in the case of a conversion initiated by EQM) following the applicable date on which notice of such conversion was delivered. Accordingly, if the price of our common units decreases during this period, the value of the common units that holders of our Series A Preferred Units receive will be adversely affected and would be less than the conversion value of the Series A Preferred Units on the applicable notice date.
We may issue additional common units and, subject to certain limitations, other equity interests ranking equal or junior to the Series A Preferred Units without unitholder approval, which would dilute our common unitholders' existing ownership interests.
Our $1 billion credit facility contains a covenant requiringpartnership agreement does not limit the number of additional limited partner interests that, with respect to distributions on such partnership interests and distributions upon our liquidation, dissolution and winding up, rank junior to the Series A Preferred Units, including our common units and Class B units, thatwe may issue at any time without the approval of our unitholders. Subject to certain limited exceptions, the issuance of additional Series A Preferred Units and partnership interests that rank equal to or senior to the Series A Preferred Units requires the consent of the holders of two-thirds (662/3%) of the outstanding Series A Preferred Units.The issuance by us to maintain a consolidated leverageof additional common units or other equity securities of equal or senior rank will have the following effects:
our existing unitholders' proportionate ownership interest in us will decrease;
the amount of distributable cash flow on each unit may decrease;
the ratio of not more than 5.00taxable income to 1.00 (or not more than 5.50 to 1.00 for certain measurement periods following distributions may increase;
the consummationrelative voting strength of certain acquisitions). Our ability to meet these covenants caneach previously outstanding unit may be affected by events beyond our controldiminished; and we cannot assure our unitholders that we will meet these covenants. In addition, our $1 billion credit facility contains events of default customary for such facilities, including
the occurrence of a change of control (which will occur, among other things, if EQT or certain permitted transferees fail to control the EQM General Partner, we fail to own 100% of Equitrans, L.P., or the EQM General Partner fails to be our general partner). Furthermore, in June 2018, we issued senior unsecured notes in an aggregate principal amount of $2.5 billion across three new series, consisting of $1.1 billion in aggregate principal amountmarket price of our 4.75% senior notes due 2023, $850 million in aggregate principal amount of our 5.5% senior notes due 2028, and $550 million in aggregate principal amount of our 6.5% senior notes due 2048.
The provisions of our debt agreementscommon units may affect our ability to obtain future financing and pursue attractive business opportunities and our flexibility in planning for, and reacting to, changes in business conditions. In addition, a failure to comply with the provisions of our debt agreements could result in an event of default, which could enable our lenders to, subject to the terms and conditions of the applicable agreement, declare any outstanding principal of that debt, together with accrued and unpaid interest, to be immediately due and payable. If the payment of our debt is accelerated, our assets may be insufficient to repay such debt in full, and our unitholders could experience a partial or total loss of their investments. The $1 billion credit facility also has cross default provisions that apply to any other indebtedness we may have with an aggregate principal amount in excess of $25 million.decline.

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Our substantial indebtednessIntegration of businesses or assets acquired in past or future acquisitions with our existing business will be a complex and time-consuming process. A failure to successfully integrate the additional debt weacquired business or assets with our existing business in a timely manner may incur in the future for, among other things, working capital, capital expenditures, capital contributions to the MVP Joint Venture, acquisitions or operating activities may adversely affect our liquidity and therefore our ability to make cash distributions to our unitholders.
Among other things, our significant indebtedness may be viewed negatively by credit rating agencies, which could result in increased costs for us to access the capital markets. Any future downgrade of the debt issued by us or our subsidiaries could significantly increase our capital costs or adversely affect our ability to raise capital in the future.
The demand for the services provided by our water distribution business could decline as a result of several factors.
Our water services business includes fresh water distribution for use in our customers’ natural gas, NGLs and oil exploration and production activities. Water is an essential component of natural gas, NGLs and oil production during the drilling, and in particular, the hydraulic fracturing process. As a result, the demand for our fresh water distribution and produced water handling services is tied to the level of drilling and completion activity of our customers, including EQT, which is currently and anticipated to continue to be our primary customer for such services. More specifically, the demand for our water distribution and produced water handling services could be adversely affected by any reduction in or slowing of EQT’s or other customers’ well completions, any reduction in produced water attributable to completion activity, or the extent to which EQT or other customers complete wells with shorter lateral lengths, which would lessen the volume of fresh water required for completion activity. In addition, increased regulation of hydraulic fracturing could result in reductions or delays in natural gas, NGLs and oil production by our water services customers, which could reduce the number of wells for which we provide water services.
Additionally, we depend on EQT to source a portion of the fresh water we distribute. The availability of our and EQT’s water supply may be limited due to reasons including, but not limited to, prolonged drought or regulatory delays associated with infrastructure development. Restrictions on the ability to obtain water or changes in wastewater disposal requirements may incentivize water recycling efforts by oil and natural gas producers, which could decrease the demand for our fresh water distribution services.
The regulatory approval process for the construction of new midstream assets is challenging, and recent decisions by regulatory and judicial authorities in pending proceedings could impact our or the MVP Joint Venture's ability to obtain all approvals and authorizations necessary to complete certain projects on the projected time frame or at all or our ability to achieve the expected investment return on the project.
Certain of our internal growth projects may require regulatory approval from federal, state and local authorities prior to construction, including any extensions from or additions to our transmission and storage system. The approval process for storage and transportation projects has become increasingly challenging, due in part to state and local concerns related to exploration and production and gathering activities in new production areas, including the Marcellus, Utica and Upper Devonian Shales, and negative public perception regarding the oil and gas industry. Such authorization may not be granted or, if granted, such authorization may include burdensome or expensive conditions.
In addition, any significant delays in the regulatory approval process for the MVP Project could increase costs and negatively impact the scheduled in-service date of fourth quarter 2019, which in turn could adversely affect the ability for MVP and its owners, including us, to achieve the expected investment return. For example, in February 2018, the Sierra Club filed a lawsuit in the Fourth Circuit Court of Appeals challenging the use of U.S. Army Corps of Engineers Nationwide Permit 12 in West Virginia for the MVP project. The MVP project is subject to several challenges that must be resolved before the MVP project can be completed, as described in more detail under "Business-Legal Proceedings."
Although the MVP Joint Venture is actively defending the relevant agency actions and judicial challenges to the project, and is in active dialogue with all of the affected agencies to resolve these issues and restore the affected permits, there is no guarantee as to how long the agency proceedings and judicial challenges will take to resolve, or whether the MVP Joint Venture will ultimately succeed in restoring the permits in their present form or within the MVP Joint Venture's targeted time frame for placing the project in service. This and other similar litigation could adversely affect EQM's business, financial condition, results of operations, liquidity and ability to make quarterly cash distributions to its unitholders.
Our natural gas gathering, transmission and storage services are subject to extensive regulation by federal, state and local regulatory authorities. Changes or additional regulatory measures adopted by such authorities could have a material adverse effect on our business, financial condition, results of operations liquidityor cash available for distribution to our unitholders.
The difficulties of integrating past and abilityfuture acquisitions with our business include, among other things:
operating a larger combined organization with assets or operations that may extend into new geographic areas and lines of business;
integrating gathering systems and other assets, infrastructure and personnel into existing operations, including addressing any new operational focuses or regulatory programs and legacy legal, operational or regulatory challenges of acquired assets or businesses;
addressing the potential diversion of management’s time and attention away from our existing business to make distributions.address integration or other related issues;
Our interstate natural gas transmissionhiring, training or retaining qualified personnel to manage and storage operations are regulated byoperate our growing business and assets;
addressing the FERC underloss of customers or key employees;
maintaining an effective system of internal controls in compliance with the Natural Gas Act (NGA), the Natural Gas Policy Act (NGPA) and the Energy PolicySarbanes-Oxley Act of 2005. Certain portions2002 as well as other regulatory compliance and corporate governance matters; and
integrating new technology systems for financial reporting.
If any of our gathering operations are also rate-regulated by the FERC in connection with our interstate transmission operations. Our FERC-regulated systems operate under

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tariffs approved by the FERC that establish rates, cost recovery mechanisms and terms and conditions of servicethese risks or other unanticipated liabilities or costs were to our customers. Generally, the FERC's authority extends to:
    rates and charges for our natural gas transmission and storage and FERC-regulated gathering services;
    certification and construction of new interstate transmission and storage facilities;
    abandonment of interstate transmission and storage services and facilities;
    maintenance of accounts and records;
    relationships between pipelines and certain affiliates;
    terms and conditions of services and service contracts with customers;
    depreciation and amortization policies;
    acquisitions and dispositions of interstate transmission and storage facilities; and
    initiation and discontinuation of interstate transmission and storage services.
Interstate pipelinesmaterialize, we may not charge ratesrealize the desired benefits from past or impose terms and conditions of service that, upon review by the FERC, are foundfuture acquisitions, which may result in a negative impact to, be unjust and unreasonable or unduly discriminatory. The recourse rate that may be charged by our interstate pipeline for its transmission and storage services is established through the FERC's ratemaking process. The maximum applicable recourse rate and terms and conditions for service are set forth in our FERC-approved tariffs.
Pursuant to the NGA, existing interstate transmission and storage rates and terms and conditions of service may be challenged by complaint and are subject to prospective change by the FERC. Additionally, rate increases and changes to terms and conditions of service proposed by a regulated interstate pipeline may be protested and such increases or changes can be delayed and may ultimately be rejected by the FERC. We currently hold authority from the FERC to charge and collect (i) "recourse rates," which are the maximum rates an interstate pipeline may charge for its services under its tariff, (ii) "discount rates," which are rates below the "recourse rates" and above a minimum level, provided they do not "unduly discriminate", (iii) "negotiated rates," which involve rates above or below the "recourse rates," provided that the affected customers are willing to agree to such rates and that the FERC has approved the negotiated rate agreement, and (iv) market-based rates for some of our storage services from which we derive a small portion of our revenues. As of December 31, 2017, approximately 89% of our system's contracted firm transmission capacity was committed under such "negotiated rate" contracts, rather than recourse, discount or market rate contracts. There can be no guarantee that we will be allowed to continue to operate under such rate structures for the remainder of those assets' operating lives. Any successful challenge against rates charged for our transmission and storage services could have a material adverse effect on, our business, financial condition, results of operations, liquidity and ability to make quarterly cash distributions to our unitholders.
While the FERC doesFurther, we may not generally regulate the ratesbe successful in integrating past or future acquisitions into our existing operations within our anticipated timeframe, which may result in unforeseen operational difficulties and terms of service over facilities determined to be performingexpenses, diminish our financial performance or require a natural gas gathering function, the FERC has traditionally regulated rates charged by interstate pipelines for gathering services performed on the pipeline's own gathering facilities when those gathering services are performed in connection with jurisdictional interstate transmission facilities. We maintain rates and terms of service in our tariff for unbundled gathering services performed on a portiondisproportionate amount of our gathering facilities that are connectedmanagement’s attention to address. In addition, acquired businesses or assets may perform at levels below the levels we anticipated at the time of acquiring such businesses due to factors beyond our transmission and storage system. Just as with rates and terms of service for transmission and storage services, our rates and terms of services for our FERC-regulated gathering services may be challenged by complaint and are subject to prospective change by the FERC. Rate increases and changes to terms and conditions of service which we propose for our FERC-regulated gathering services may be protested, and such increases or changescontrol. As a result, there can be delayedno assurance that our past or future acquisitions, including our combination with RMP and our acquisition of interests in Eureka Midstream Holdings, LLC and Hornet Midstream Holdings, LLC, will deliver the benefits anticipated by us, and any failure to create such benefits may ultimately be rejected by the FERC.
The FERC's jurisdiction extends to the certification and construction of interstate transmission and storage facilities, including, but not limited to, acquisitions, facility maintenance, expansions, and abandonment of facilities and services. While the FERC exercises jurisdiction over the rates and terms of service for our FERC-regulated gathering services, these gathering facilities are not subject to the FERC's certification and construction authority. Prior to commencing construction of new or existing interstate transmission and storage facilities, an interstate pipeline must obtain a certificate authorizing the construction, or file to amend its existing certificate, from the FERC. On April 19, 2018, the FERC issued a Notice of Inquiry seeking information regarding whether, and if so how, it should revise its approach under its currently effective policy statement on the certification of new natural gas transportation facilities. We cannot currently predict when the FERC will issue an order in the Notice of Inquiry proceeding or what action the FERC may take in any such order. If the FERC changes its existing certificate policy, it could impact our ability to construct interstate pipeline facilities. Further, typically, a significant expansion project requires review by a number of governmental agencies, including state and local agencies, whose cooperation is important in

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completing the regulatory process on schedule. Any agency's delay in the issuance of, or refusal to issue, authorizations or permits for one or more of these projects may mean that we will not be able to pursue these projects or that they will be constructedresult in a mannernegative impact to, or with capital requirements that we did not anticipate. Such delays, refusals or resulting modifications to projects could materially and negatively impact the revenues and costs expected from these projects or cause us to abandon planned projects.
FERC regulations also extend to the terms and conditions set forth in agreements for transmission and storage services executed between interstate pipelines and their customers. These service agreements are required to conform, in all material respects, with the forms of service agreements set forth in the pipeline's FERC-approved tariff. Non-conforming agreements must be filed with, and accepted by, the FERC. In the event that the FERC finds that an agreement is materially non-conforming, in whole or in part, it could reject the agreement or require us to seek modification, or alternatively require us to modify our tariff so that the non-conforming provisions are generally available to all customers.
On March 15, 2018, the FERC issued an order prohibiting master limited partnership (MLP)-owned pipelines from including an allowance for investor income tax liability in their cost-of-service based rates. Under its prior policy, the FERC had permitted all interstate pipelines to include an income tax allowance in the cost-of-service used as the basis for calculating their regulated rates. On July 18, 2018, the FERC issued an order affirming the principal finding in the March order regarding income tax recovery and also clarifying the treatment of Accumulated Deferred Income Taxes (ADIT) in light of the prohibition on MLP income tax allowances. Also on July 18, 2018, the FERC issued Order No. 849, adopting regulations requiring that natural gas pipelines must make a one-time report, Form 501-G, due in the fourth quarter of 2018. For MLP-owned pipelines, the Form 501-G report must calculate an earned rate of return on equity that addresses any potential over-recovery of their cost of service arising from the prohibition of the income tax allowance and the ADIT clarification. The FERC will evaluate these Form 501-G filings on a case-by-case basis and may open a limited or a general rate case, open an investigation, or take no further action. This recent action by the FERC could adversely affect our business, financial condition, results of operations, liquidity and ability to make cash distributions to our unitholders.
The FERC may not continue to pursue its approach of pro-competitive policies as it considers matters such as interstate pipeline rates and rules and policies that may affect rights of access to natural gas transmission capacity and transmission and storage facilities.
Section 1(b) of the NGA exempts certain natural gas gathering facilities from regulation by the FERC under the NGA. We believe that our high pressure natural gas gathering pipelines meet the traditional tests the FERC has used to establish a pipeline's status as an exempt gatherer not subject to regulation as a natural gas company, although the FERC has not made a formal determination with respect to the jurisdictional status of those facilities. However, the distinction between FERC-regulated transmission services and federally unregulated gathering services is often the subject of litigation within the industry, so the classification and regulation of our high pressure gathering systems are subject to change based on future determinations by the FERC, the courts or the U.S. Congress.
Failure to comply with applicable provisions of the NGA, the NGPA, federal pipeline safety laws and certain other laws, as well as with the regulations, rules, orders, restrictions and conditions associated with these laws, could result in the imposition of administrative and criminal remedies and civil penalties. For example, the FERC is authorized to impose civil penalties of up to approximately $1.2 million per violation, per day for violations of the NGA, the NGPA or the rules, regulations, restrictions, conditions and orders promulgated under those statutes. This maximum penalty authority established by statute will continue to be adjusted periodically for inflation.
In addition, future federal, state or local legislation or regulations under which we will operate our natural gas gathering, transmission and storage businesses may have a material adverse effect on, our business, financial condition, results of operations, liquidity and ability to make quarterly cash distributions to our unitholders.
Negative public perception regarding EQM, the MVP and/or the midstream industry could have an adverse effect on EQM's operations.
Negative public perception regarding EQM, the MVP and/or the midstream industry resulting from, among other things, oil spills, the explosion of natural gas transmission and gathering lines and concerns raised by advocacy groups about hydraulic fracturing and pipeline projects, has led to, and may in the future lead to, increased regulatory scrutiny, which may, in turn, lead to new local, state and federal safety and environmental laws, regulations, guidelines and enforcement interpretations. These actions may cause operational delays or restrictions, increased operating costs, penalties under construction contracts, additional regulatory burdens and increased risk of litigation. As discussed under-"The regulatory approval process for the construction of new midstream assets is challenging, and recent decisions by regulatory and judicial authorities in pending proceedings could impact EQM's or the MVP Joint Venture's ability to obtain all approvals and authorizations necessary to complete certain projects on the projected time frame or at all or its ability to achieve the expected investment return on the

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project," there are several pending challenges to certain aspects of the MVP project that must be resolved before the MVP project can be completed. Moreover, governmental authorities exercise considerable discretion in the timing and scope of permit issuance and the public may engage in the permitting process, including through intervention in the courts. Negative public perception could cause the permits EQM and the MVP Joint Venture need to conduct their operations to be withheld, delayed or burdened by requirements that restrict their ability to profitably conduct business.

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Item 6. Exhibits

 
Exhibit No. Document Description Method of Filing
3.12.1

 Agreement and Plan of Merger, dated as of February 13, 2019, by and among Equitrans Midstream Corporation, EQM Midstream Services, LLC, EQM Midstream Partners, LP, EQGP Services, LLC, EQGP Holdings, LP and the other parties thereto. Equitrans Midstream Corporation will furnish supplementally a copy of any omitted schedule and similar attachment to the SEC upon request.Incorporated herein by reference to Exhibit 2.1 to EQM Midstream Partners, LP's Form 8-K (#001-35574) filed on February 14, 2019.
2.2

Purchase and Sale Agreement, dated as of March 13, 2019, by and between EQM Midstream Partners, LP and North Haven Infrastructure Partners II Buffalo Holdings, LLC. Equitrans Midstream Corporation will furnish supplementally a copy of any omitted schedule and similar attachment to the SEC upon request.Incorporated herein by reference to Exhibit 2.1 to EQM Midstream Partners, LP's Form 8-K (#001-35574) filed on March 15, 2019.
3.1(a)

Certificate of Formation of EQGP Services, LLC (formerly known as EQT GP Services, LLC), dated as of January 29, 2015.Incorporated herein by reference to Exhibit 3.3 to EQT GP Holdings, LP's Form S-1 Registration Statement
(#333-202053) filed on February 12, 2015.
3.1(b)

Certificate of Amendment to Certificate of Limited PartnershipFormation of EQGP Services, LLC (formerly known as EQT Midstream Partners, LP,GP Services, LLC), dated as of October 12, 2018. 
Incorporated herein by reference herein to Exhibit 3.13.2 to EQGP Holdings, LP's Form 8-K (#001-37380) filed on October 15, 2018.
3.2(a)

Second Amended and Restated Limited Liability Company Agreement of EQGP Services, LLC, dated as of October 12, 2018.Incorporated herein by reference to Exhibit 3.4 to EQGP Holdings, LP's Form 8-K (#001-37380) filed on October 15, 2018.
3.2(b)

First Amendment to Second Amended and Restated Limited Liability Company Agreement of EQGP Services, LLC, dated as of February 22, 2019.Incorporated herein by reference to Exhibit 3.5 to EQM Midstream Partners, LP’s Form 8-K (#001-35574) filed on October 15, 2018.
3.2

Certificate of Amendment to Certificate of Formation of EQT Midstream Services, LLC, dated as of October 12, 2018.
Incorporated by reference herein to Exhibit 3.2 to EQM Midstream Partners, LP’s Form 8-K (#001-35574) filed on October 15, 2018.
February 22, 2019.
3.3

 
First Amendment to Second Amended and Restated Agreement of Limited Partnership of EQM Midstream Partners, LP, dated as of October 12, 2018.
February 22, 2019.		 
Incorporated herein by reference to Exhibit 3.1 to EQM Midstream Partners, LP’s Form 8-K (#001-35574) filed on February 22, 2019.
3.4

Third Amended and Restated Agreement of Limited Partnership of EQM Midstream Partners, LP, dated as of February 22, 2019.Incorporated herein by reference to Exhibit 3.2 to EQM Midstream Partners, LP’s Form 8-K (#001-35574) filed on February 22, 2019.
3.5

Fourth Amended and Restated Agreement of Limited Partnership of EQM Midstream Partners, LP, dated as of April 10, 2019.Incorporated herein by reference to Exhibit 3.1 to EQM Midstream Partners, LP’s Form 8-K (#001-35574) filed on April 10, 2019.
3.6

Certificate of Amendment to Certificate of Limited Partnership of EQM Midstream Partners, LP, dated as of February 22, 2019.Incorporated herein by reference to Exhibit 3.3 to EQM Midstream Partners, LP’s Form 8-K (#001-35574) filed on October 15, 2018.February 22, 2019.
3.44.1

 
Fourth Amended and Restated Limited Liability CompanyRegistration Rights Agreement, of EQM Midstream Services, LLC, dated as of October 12, 2018.
April 10, 2019, by and among EQM Midstream Partners, LP and the Purchasers party thereto. Equitrans Midstream Corporation will furnish supplementally a copy of any omitted schedule and similar attachment to the SEC upon request.		 
Incorporated herein by reference herein to Exhibit 3.44.1 to EQM Midstream Partners, LP’s Form 8-K (#001-35574) filed on October 15, 2018.
April 10, 2019.
10.110.1(a)

 
Gas Gathering and CompressionConvertible Preferred Unit Purchase Agreement, dated as of December 22, 2014,March 13, 2019, by and among Rice Drilling B LLC, RiceEQM Midstream Partners, LP and Alpha Shale Resources LP.
the Purchasers party thereto. Equitrans Midstream Corporation will furnish supplementally a copy of any omitted schedule and similar attachment to the SEC upon request.		 Incorporated herein by reference to Exhibit 10.1 to EQM Midstream Partners, LP's Form 8-K (#001-35574) filed on March 15, 2019.

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10.1(b)

Joinder Agreement, dated as of March 18, 2019, by and between EQM Midstream Partners, LP and Kayne Anderson MLP/Midstream Investment Company.Incorporated herein by reference to Exhibit 10.1 to EQM Midstream Partners, LP's Form 8-K (#001-35574) filed on March 19, 2019.
10.1(c)

Joinder Agreement, dated as of March 18, 2019, by and between EQM Midstream Partners, LP and Kayne Anderson Midstream/Energy Fund, Inc.Incorporated herein by reference to Exhibit 10.2 to Equitrans Midstream Corporation’s Form 8-K (#001-38629) filed on March 19, 2019.
10.1(d)

Joinder Agreement, dated as of March 18, 2019, by and between EQM Midstream Partners, LP and Centaurus Capital LP.Incorporated herein by reference to Exhibit 10.3 to RiceEquitrans Midstream Corporation’s Form 8-K (#001-38629) filed on March 19, 2019.
10.1(e)

Joinder Agreement, dated as of March 18, 2019, by and between EQM Midstream Partners, LP'sLP and MTP Energy Opportunities Fund II LLC.Incorporated herein by reference to Exhibit 10.4 to Equitrans Midstream Corporation’s Form 8-K (#001-36789)(#001-38629) filed on December 22, 2014.March 19, 2019.
10.1(f)

Joinder Agreement, dated as of March 18, 2019, by and between EQM Midstream Partners, LP and MTP Energy Master Fund LLC.Incorporated herein by reference to Exhibit 10.5 to Equitrans Midstream Corporation’s Form 8-K (#001-38629) filed on March 19, 2019.
10.1(g)

Joinder Agreement, dated as of March 18, 2019, by and between EQM Midstream Partners, LP and Tortoise Direct Opportunities Fund II, LP.Incorporated herein by reference to Exhibit 10.6 to Equitrans Midstream Corporation’s Form 8-K (#001-38629) filed on March 19, 2019.
10.1(h)

Joinder Agreement, dated as of March 18, 2019, by and between EQM Midstream Partners, LP and Portcullis Partners, LP.Incorporated herein by reference to Exhibit 10.7 to Equitrans Midstream Corporation’s Form 8-K (#001-38629) filed on March 19, 2019.
10.2

 Amended and Restated EQGP Services, LLC 2012 Long-Term Incentive Plan, dated as of February 22, 2019.Incorporated herein by reference to Exhibit 10.1 to EQM Midstream Partners, LP's Form 8-K (#001-35574) filed on February 22, 2019.
First 10.3

Amended and Restated Omnibus Agreement, dated as of March 31, 2019, by and among Equitrans Midstream Corporation, EQM Midstream Partners, LP, EQGP Services, LLC and, for limited purposes, EQM Midstream Services, LLC.
Filed herewith as Exhibit 10.3.

10.4

Amendment No. 6 to Jupiter Gas Gathering and Compression Agreement, effectivedated as of October 19, 2016,March 1, 2019, by and among EQT Production Company and EQT Energy, LLC, on the one hand, and EQM Gathering Opco, LLC, on the other hand. Specific items in this exhibit have been redacted, as marked by three asterisks [***].Filed herewith as Exhibit 10.4.
10.5

Letter Agreement, dated as of March 1, 2019, among RM Partners LP, Equitrans, L.P., Rice Drilling B LLC, EQM Gathering OPCO, LLC and Alpha Shale Resources LP and Rice Midstream Partners LP. Specific items in this exhibit have been redacted, as marked by three asterisks [***], because confidential treatment for those items has been requested from the SEC. The redacted material has been separately filed with the SEC.. 
Filed herewith as Exhibit 10.2.
10.3
10.5.
Sixth Amended and Restated Cracker Jack Gas Gathering Agreement, dated as of February 28, 2017, by and among Rice Poseidon Midstream LLC, EQT Energy, LLC and EQT Production Company. Specific items in this exhibit have been redacted, as marked by three asterisks [***], because confidential treatment for those items has been requested from the SEC. The redacted material has been separately filed with the SEC.
Filed herewith as Exhibit 10.3.
10.4

Amended and Restated Water Services Agreement, dated as of November 4, 2015, by and between Rice Drilling D LLC and Rice Water Services (PA) LLC.
Incorporated herein by reference to Exhibit 10.2 to Rice Midstream Partners LP's Form 8-K (#001-36789) filed on November 5, 2015.
10.5

Amended and Restated Water Services Agreement, dated as of November 4, 2015, by and between Rice Drilling B LLC and Rice Water Services (OH) LLC.
Incorporated herein by reference to Exhibit 10.3 to Rice Midstream Partners LP's Form 8-K (#001-36789) filed on November 5, 2015.
10.6

Letter Agreement, dated as of August 9, 2018, by and between EQT Corporation and Thomas F. Karam.
Filed herewith as Exhibit 10.6.
10.7

Confidentiality, Non-Solicitation And Non-Competition Agreement, dated as of August 9, 2018, by and between EQT Corporation and Thomas F. Karam.
Filed herewith as Exhibit 10.7.
31.1

 
Rule 13(a)-14(a) Certification of Principal Executive Officer.
 
Filed herewith as Exhibit 31.1.
31.2

 
Rule 13(a)-14(a) Certification of Principal Financial Officer.
 
Filed herewith as Exhibit 31.2.
32

 
Section 1350 Certification of Principal Executive Officer and Principal Financial Officer.
 
Furnished herewith as Exhibit 32.
101
 Interactive Data File.File Filed herewith as Exhibit 101.101

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Signature
 
 
 
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 
 
 
 
 EQM Midstream Partners, LP
 (Registrant)
   
 By:EQM MidstreamEQGP Services, LLC, its General Partner
   
   
   
 By:/s/ Robert J. McNallyTHOMAS F. KARAM
  Robert J. McNallyThomas F. Karam
  Senior Vice President and Chief FinancialExecutive Officer
 
 
 
 
 
 
 
 
 
 
 
 
 
Date:  October 25, 2018April 30, 2019


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