(EQT, 15.Apr.2024) — EQT Corporation (NYSE: EQT) entered into an agreement with Equinor USA Onshore Properties Inc. and their affiliates to sell an undivided 40% interest in its non-operated natural gas assets in Northeast Pennsylvania, representing approximately 225 MMcf/d of forecasted 2025 net production. Consideration for the transaction is comprised of $500mn of cash and upstream and midstream assets as described below. Based on recent strip pricing, EQT forecasts aggregate 2025 free cash flow(1) of approximately $75mn from the non-cash consideration.
The assets EQT is receiving in the transaction consist of:
- ~26,000 net acres in Monroe County, Ohio with 2025E net production of ~135 MMcfe/d directly offsetting EQT-operated acreage
- ~10,000 net acres in Lycoming County, Pennsylvania with 2025E net production of ~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
- A gas buy-back agreement 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 stated, “This transaction marks an extremely positive start to our divestiture program, bringing in over $1.1bn of value, including synergies and development plan optimization, for 40% of our non-operated assets, while retaining gas price upside. We plan to opportunistically divest the remaining portion of our non-operated assets in Northeast Pennsylvania and have tremendous confidence in being able to achieve our de-leveraging goals.”
The transaction is subject to customary closing adjustments, required regulatory approvals and clearances, and is expected to close in late second quarter of 2024. EQT expects no cash tax leakage associated with the transaction.
Advisors
Jefferies LLC acted as lead financial advisor and TD Securities acted as a financial advisor to EQT. Kirkland & Ellis LLP is serving as EQT’s legal counsel on the transaction.
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| (1) | A non-GAAP financial measure. See the Non-GAAP Disclosures section of this news release for the definition of, and other important information regarding, this non-GAAP financial measure. |
