EQT Corporation EQT, a leading U.S.-based natural gas producer, is reportedly in talks with Blackstone, a major private equity (PE) firm, to sell minority stakes in its interstate natural gas pipelines, per Reuters. The transaction is valued at approximately $3.5 billion. The two companies are currently going through extensive discussions, and if everything falls in place, a deal might be finalized in the upcoming weeks, according to sources.

This might ease a considerable amount of the debt burden on EQT due to its acquisition of Equitrans Midstream. The private equity firm has mentioned that it plans to fund the transaction through its credit and insurance wing. Per Reuters, EQT will continue to operate the pipeline after the deal is finalized.

The transaction is expected to contribute to a steady stream of earnings for BlackStone, which it can utilize for other investment plans. Pipelines and other energy infrastructure assets are known to provide a reliable stream of income as they often work through long-term contracts. By investing in EQT’s assets, BlackStone will also gain access to the controversial Mountain Valley Pipeline. This pipeline spans over 300 miles, connecting West Virginia to Virginia, and is a crucial part of the U.S. natural gas pipeline network.

The Mountain Valley Pipeline has been a controversial asset for a long time. The pipeline faced several setbacks, which caused delays in its construction. After fighting a legal battle over several years, the pipeline finally came into operation in June this year.

EQT holds interests in 940 miles of interstate natural gas pipelines. These natural gas pipelines have a combined capacity of approximately 4.4 billion cubic feet per day (bcf/d). EQT also holds a stake in the entity that owns the Mountain Valley Pipeline. Notably, the natural gas producer’s stake in this entity is a crucial asset included in the deal. The acquisition of Equitrans Midstream marked a milestone for EQT, transforming the company from an exploration and production player focused on natural gas to a vertically integrated natural gas seller. However, the acquisition added a significant debt load of about $14 billion for EQT.

EQT’s Zacks Rank and Key Picks

Currently, EQTcarries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the energy sector are Archrock Inc. AROC, The Williams Companies, Inc. WMB and FuelCell Energy FCEL. Archrock presently sports a Zacks Rank #1 (Strong Buy), while The Williams Companies and FuelCell Energy carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.