EQT Announces $500 Million Asset Transaction with Equinor USA

By Bobby Samwell • Monday, April 15 15:16 • Permanent Link

EQT Corporation (NYSE: EQT) has recently announced a significant non-operated asset transaction with Equinor USA Onshore Properties Inc. and their affiliates. The agreement involves the sale of a 40% interest in its non-operated natural gas assets in northeast Pennsylvania, representing approximately 225 million cubic feet per day (MMcf/d) of forecasted 2025 net production. The consideration for the transaction amounts to $500 million in cash and upstream and midstream assets.

EQT forecasts an aggregate 2025 free cash flow of approximately $75 million from the non-cash consideration based on recent strip pricing. The assets EQT is set to receive from the transaction include approximately 26,000 net acres in Monroe County, Ohio, with a 2025 estimated net production of about 135 million cubic feet equivalent per day (MMcfe/d), which directly offsets EQT-operated acreage. Additionally, it involves around 10,000 net acres in Lycoming County, Pennsylvania, with 2025 estimated net production of approximately 15 MMcfe/d in existing EQT-operated assets. The remaining 16.25% ownership in EQT-operated gathering systems servicing core operated acreage in Lycoming County, Pennsylvania, is also part of the assets.

Furthermore, as part of the transaction, there is a gas buy-back agreement in place whereby Equinor will purchase gas from EQT at a premium to in-basin pricing through the first quarter of 2028.

EQT President and CEO Toby Z. Rice expressed optimism about the deal, noting that it marks a positive start to their divestiture program, bringing in over $1.1 billion of value, including synergies and development plan optimization, for 40% of their non-operated assets, while retaining gas price upside.

The transaction is expected to close in the late second quarter of 2024, subject to customary closing adjustments, required regulatory approvals and clearances. EQT anticipates no cash tax leakage associated with the transaction.

Advisors for the transaction included Jefferies LLC as the lead financial advisor and TD Securities as a financial advisor to EQT, while Kirkland & Ellis LLP is serving as EQT's legal counsel on the transaction.

This non-operated asset transaction reflects EQT's strategic efforts to optimize its asset portfolio, leverage value from its non-operated assets, and achieve its de-leveraging goals. Following these announcements, the company's shares moved -2.1%, and are now trading at a price of $36.47. If you want to know more, read the company's complete 8-K report here.

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