Natural gas producer EQT and Equitrans Midstream have signed a merger agreement, creating a key vertically integrated natural gas company in the US.
The combined entity will boast an enterprise value exceeding $35bn.
The boards of both companies have unanimously accepted the merger terms, which call for EQT to acquire Equitrans in exchange for all of its equity.
Equitrans shareholders will receive 0.3504 shares of EQT stock for each Equitrans share, equating to an implied value of $12.50 per Equitrans share based on recent EQT stock prices.
Following the merger, EQT shareholders would own around 74% of the combined company, while Equitrans shareholders will own the remaining 26%.
The transaction is anticipated to conclude in the fourth quarter of 2024, subject to receipt of regulatory approvals and other conditions.
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By GlobalDataFollowing the merger, Equitrans will appoint three representatives to EQT’s board of directors, and the executive management team of EQT will oversee the merged company from its headquarters in Pittsburgh.
With 27.6 trillion cubic feet equivalent of proved reserves and daily net production of 6.3 billion cubic feet equivalent, the combined company will manage more than 2,000 miles of pipeline infrastructure.
The merger is set to lower EQT’s long-term corporate free cash flow breakeven to under $2/MBtu.
EQT president and CEO Toby Z Rice said: “Equitrans is the most strategic and transformational transaction EQT has ever pursued, and we see this as a once in a lifetime opportunity to vertically integrate one of the highest-quality natural gas resource bases anywhere in the world.
“As we enter the global era of natural gas, it is imperative for US natural gas companies to evolve their business models to compete on the global stage against vertically integrated rivals. We have identified multiple, high confidence near-term synergies, with significant upside from future infrastructure optimisation projects that we believe will drive material value creation for shareholders over time.
“Our modern, data-driven operating model, first-hand knowledge of Equitrans’ operations and successful track record integrating $9bn of acquisitions, all of which included midstream assets, gives me tremendous confidence in EQT’s ability to seamlessly combine the two companies and capture synergies.”
In December 2023, Reuters reported that EQT was considering divesting stakes in oil and gas assets in Pennsylvania to raise more than $3bn.
