S&P Global Ratings placed EQT Corp.'s corporate credit and senior unsecured debt ratings on CreditWatch with negative implications in light of the company's plan to spin off its midstream businesses and become a pure shale gas producer.

The company is planning to separate its natural gas upstream and midstream businesses by forming a new corporation for its pipeline operations. This would involve a dropdown of EQT's midstream assets to EQT Midstream Partners LP, a merger between EQT Midstream and Rice Midstream Partners LP and a sale of Rice Midstream's incentive distribution rights to EQT GP Holdings LP.

If the transactions are completed, the rating agency expects to downgrade, limited to one notch, its BBB ratings on the nation's largest natural gas producer. One notch below BBB is BBB-, the lowest rating above speculative grade.

EQT executives were positive on the prospects of keeping the company's investment-grade rating. "We've had discussions with the rating agencies and do believe that the plan that we've laid out would result in investment-grade ratings at both EQM, or the midstream entities, and EQT," EQT CFO Robert McNally said on a Feb. 21 conference call. "And I'd say our confidence level [in maintaining investment grade] now, it's fairly high."

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.