Separation and Distribution and Discontinued Operations (Tables)

12 Months Ended

Dec. 31, 2018

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations

The results of operations of Equitrans Midstream are presented as discontinued operations in the Statements of Consolidated Operations as summarized below. The Company allocated all of the transaction costs associated with the Separation and Distribution to discontinued operations. The transaction costs included in the table below also included amounts that the Company allocated to discontinued operations for the Rice Merger (see Note 3).

	January 1, 2018 to November 12, 2018			Years Ended December 31,
				2017			2016
	(Thousands)
Operating revenues	$	388,854		$	279,422		$	217,952
Transportation and processing	(803,858		)	(604,025		)	(514,373		)
Operation and maintenance	99,671			80,833			69,308
Selling, general and administrative	62,702			53,275			44,022
Depreciation	160,701			106,574			71,469
Impairment/loss on sale of long-lived assets	—			—			59,748
Impairment of goodwill (a)	267,878			—			—
Transaction costs	93,062			85,124			—
Amortization of intangible assets	36,007			5,540			—
Other income	51,014			26,610			28,718
Interest expense	88,300			34,801			16,761
Income from discontinued operations before income taxes	435,405			543,910			499,735
Income tax expense	61,643			72,797			99,305
Income from discontinued operations after income taxes	373,762			471,113			400,430
Less: Net income from discontinued operations attributable to noncontrolling interests	237,410			349,613			321,920
Net income from discontinued operations	$	136,352		$	121,500		$	78,510

(a) Following the third quarter of 2018 and prior to the Separation and Distribution, indicators of goodwill impairment were identified in the form of the announced production curtailments that could reduce volumetric-based fee revenues of two reporting units to which the Company's goodwill was recorded. The two reporting units were Rice Retained Midstream and RMP PA Gas Gathering, which were allocated to discontinued operations as a result of the Separation and Distribution. Both of these reporting units earn a substantial portion of their revenues from volumetric-based fees, which are sensitive to changes in development plans. In estimating the fair value of these reporting units, a combination of the income approach and the market approach were utilized. The discounted cash flow method income approach applies significant inputs not observable in the public market (Level 3), including estimates and assumptions related to future throughput volumes, operating costs, capital spending and changes in working capital. The comparable company method market approach and reference transaction method evaluates the value of a company using metrics of other businesses of similar size and industry. The reference transaction method evaluates the value of a company based on pricing multiples derived from similar transactions entered into by similar companies.

For the year ended December 31, 2018, the fair value of the Rice Retained Midstream reporting unit was greater than its carrying value; however, the carrying value of the RMP PA Gas Gathering reporting unit exceeded its fair value. As a result, impairment of goodwill of $267.9 million was recorded with a corresponding decrease to goodwill on the Consolidated Balance Sheet and allocated to discontinued operations.

The carrying amount of the major classes of assets and liabilities related to Equitrans Midstream classified as assets and liabilities of discontinued operations in the Consolidated Balance Sheet at December 31, 2017 are presented in the below table.

	December 31, 2017
	(Thousands)
Total assets of discontinued operations
Cash and cash equivalents	$	121,004
Accounts receivable, net	60,551
Prepaid expenses and other (a)	(25,295		)
Current assets of discontinued operations	156,260
Net property, plant and equipment	5,155,007
Intangible assets, net	617,660
Goodwill	1,527,877
Investment in nonconsolidated entity	460,546
Other assets	28,168
Noncurrent assets of discontinued operations	7,789,258
Total assets of discontinued operations	$	7,945,518
Total liabilities of discontinued operations
Accounts payable (a)	$	(71,809	)
Other current liabilities	151,842
Current liabilities of discontinued operations	80,033
Credit facility borrowings	466,000
Senior Notes	987,352
Deferred income taxes	(121,062		)
Notes payable to EQM Midstream Partners, LP (See Note 10)	(114,720		)
Other liabilities and credits	30,462
Noncurrent liabilities of discontinued operations	1,248,032
Total liabilities of discontinued operations	$	1,328,065

(a) As of December 31, 2017, prepaid expenses and other represents the receivable from Equitrans Midstream and accounts payable represents the payable to Equitrans Midstream.

The following table presents amounts of the discontinued operations related to Equitrans Midstream which are included in the Statements of Consolidated Cash Flows.

	January 1, 2018 to November 12, 2018			Years Ended December 31,
				2017			2016
	(Thousands)
Operating activities:
Deferred income tax (benefit) expense	$	(373,405	)	$	43,471		$	(21,936	)
Depreciation	160,701			106,574			71,469
Amortization of intangibles	36,007			5,540			—
Asset impairments	—			—			59,748
Goodwill impairment	267,878			—			—
Other income	(51,450		)	(27,281		)	(29,300		)
Share-based compensation expense	$	1,841		$	468		$	373
Investing activities:
Capital expenditures	$	(732,727	)	$	(380,151	)	$	(584,819	)
Capital contributions to Mountain Valley Pipeline, LLC (a)	(820,943		)	(159,550		)	(98,399		)
Sales of interests in Mountain Valley Pipeline, LLC (a)	$	—		$	—		$	12,533
Financing activities:
Net proceeds from the issuance of common units of EQM	$	—		$	—		$	217,102
Proceeds from issuance of debt	2,500,000			—			500,018
Increase in borrowings on credit facilities	3,378,500			544,084			740,000
Repayment of borrowings on credit facilities	(3,219,500		)	(344,000		)	(1,039,000		)
Distributions to noncontrolling interests	(380,651		)	(236,123		)	(189,981		)
Contribution to Strike Force Midstream LLC by minority owner, net of distribution	—			6,738			—
Acquisition of 25% of Strike Force Midstream LLC	(175,000		)	—			—
Debt issuance costs and revolving credit facility origination fees	$	(40,966	)	$	(2,257	)	$	(8,580	)

(a) The Mountain Valley Pipeline, LLC is a joint venture that is constructing the Mountain Valley Pipeline (MVP). EQM owns an interest in the joint venture and made capital contributions to the joint venture.