EQT has agreed to acquire rival Appalachian Basin producer Range Resources in an all-stock transaction that would create a US natural gas entity with a pro forma enterprise value of more than $50bn.
Under the proposed merger agreement, each Range common share would be exchanged for 0.987 EQT common shares. EQT shareholders are expected to hold about 73% of the combined group, while Range investors would own the remaining 27%.
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Both companies are currently listed on the New York Stock Exchange (NYSE).
The boards of both companies unanimously approved the agreement. Completion is anticipated in the first quarter of 2027, subject to regulatory approvals and clearances, shareholder votes at both companies and other customary conditions.
EQT said the combined business would have net production of more than nine billion cubic feet equivalent per day (bcfe/d), nearly three million net acres and more than 30 years of inventory. It would also include more than 3,700 miles of midstream infrastructure.
The company expects the transaction to reduce its unlevered free cash flow breakeven to below $2 per million british thermal units (mmbtu) and increase its exposure to natural gas liquids.
EQT forecast base annual synergies of $325m within two years, covering corporate functions, operations and commodities marketing.
It said longer-term synergies could exceed $600m through development and infrastructure optimisation.
Additional value is expected to come from improved marketing margins for natural gas, liquefied natural gas (LNG) and natural gas liquids (NGL), as well as faster inventory development linked to contractual demand.
EQT also projected cumulative free cash flow of about $20bn over five years at recent strip pricing. The company said the combined group was expected to have BBB-quality credit metrics when the transaction closes.
EQT president and CEO Toby Rice said: “This transaction brings together two of the highest-quality, longest-duration asset bases in North America and creates a company uniquely positioned for the next era of natural gas.
“As the lowest-cost natural gas producer in the industry, supported by multiple decades of high-quality inventory, the combined company will offer exceptional resilience through commodity cycles while maintaining significant upside to strengthening natural gas fundamentals.
“Additionally, our expanded resource base solidifies EQT as the operator of choice for premium, long-term supply arrangements and provides unique growth optionality underpinned by contractual demand.”
EQT’s executive management team would run the combined company, which would remain headquartered in Canonsburg, Pennsylvania. Two Range representatives, including Dennis Degner, are due to join EQT’s board after completion.
Range president and CEO Dennis Degner said: “The combined company will be uniquely positioned to capitalise on increasing demand for natural gas and liquids both domestically and internationally, delivering superior returns for investors.”
Citi and RBC Capital Markets advised EQT financially, with Kirkland & Ellis acting as legal counsel. Evercore was Range’s lead financial adviser, alongside J.P. Morgan Securities, while Gibson, Dunn & Crutcher provided legal advice.
