EQT Takes Smaller Bite of Appalachian Apple
EQT Corp, the largest natural gas producer in the US, took a smaller-than-expected bite of the Appalachian apple on October 27, announcing an agreed plan to buy US major Chevron’s upstream and midstream assets in the basin for $735mn.
Last week, EQT had been rumored on the trail of the much bigger CNX Resources, which would have brought about 1.4bn ft3/day of Marcellus production into its portfolio.
Instead, the Pittsburgh-based EQT took on Chevron’s Marcellus assets: 450mn ft3/day-equivalent of production (75% gas), 100 “work-in-progress” wells, 335,000 net Marcellus acres, a 31% interest in Laurel Mountain Midstream and two water systems and associated infrastructure located in Pennsylvania and West Virginia.
“This acquisition is a natural bolt-on extension of EQT’s dominant position in the core of the southwest Marcellus and supplements our already impressive asset base,” EQT CEO Toby Rice said. “With the purchase price underpinned by PDP value, the extensive work-in-progress well inventory, core undeveloped acreage and water assets provide material value upside.”
The acquisition is expected to close late in Q4 2020, subject to customary closing conditions and adjustments, with an effective date under the purchase and sale agreement of July 1, 2020. EQT intends to finance the transaction with cash on hand, drawings under its revolving credit facility and/or one or more capital market transactions, one of which it announced immediately after the Chevron deal: a public offering of 20mn shares at $15.50/share, with a 30-day option to underwriters to acquire an additional 3mn shares at the same price.