EQT Corp. announced Thursday it agreed to acquire assets in Appalachia for $2.9 billion in cash and stock from closely held Alta Resources Development LLC. In fact, the deal will give EQT Alta’s interests in upstream and midstream businesses. Besides, it will add 300,000 acres in the Marcellus Shale.
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EQT on expanding its presence in Marcellus Shale
On Thursday, the largest US natural gas producer EQT Corp. announced it agreed to acquire assets in Appalachia. In fact, this acquisition was valued at $2.9 billion in cash and stock from closely held Alta Resources Development LLC.
Therefore, this deal will give EQT’s Alta’s interests in upstream and midstream businesses. Also, it will add 30,000 acres in the Marcellus Shale.
Moreover, both companies expect the transaction to close in the third quarter of 2021. Finally, it will add about 1 billion cubic feet per day equivalent of gas production and boost EQT’s annual free cash flow by as much as $400 million.
Indeed, the company has recently been looking to expand via acquisitions. Notably, the company is taking these actions to achieve economies of scale as gas prices remain subdued.
Thus, Pittsburgh-based company agreed to buy Chevron Corp.’s assets in Appalachia for $735 million in October. Additionally, it approached CNX Resources Corp. about a combination that same month.
Closely held, Alta, led by Joseph Greenberg, has Blackstone Group Inc.’s credit arm among its backers.
According to EQT’s Chief Executive Officer Toby Rice, the Alta deal “represents an attractive entry into the Northeast Marcellus. In fact, this while accelerating our deleveraging path, providing attractive free cash flow.”
Moreover, Holly Stewart, an analyst at Scotiabank, wrote in a note to clients: “Investors are likely to remain skeptical as the deal is outside of EQT’s core operating area and is heavy on equity,”
Thus, “admittedly, this checks a lot of consolidation boxes, but we anticipate near-term weakness as investors digest and gain comfort around a large, step-out transaction.”
On the other hand, BofA Securities worked as a financial adviser to EQT on the deal. Besides, Latham & Watkins LLP is its legal counsel. Finally, for Alta, Citi Global Markets Inc. is a financial adviser, and Kirkland & Ellis LLP is legal counsel.
