... EQT to Acquire Rice Energy for $6.7 Billion

EQT to Acquire Rice Energy for $6.7 Billion

Pittsburgh-based EQT Corp. announced plans to buy Rice Energy Inc., based in Canonsburg, Pennsylvania, for approximately $6.7 billion.

Under the terms of a definitive merger agreement, EQT will acquire all of the outstanding shares of Rice common stock — consisting of 0.37 shares of EQT common stock and $5.30 in cash per share of Rice common stock. EQT will also assume or refinance approximately $1.5 billion of net debt and preferred equity. The transaction is expected to close in the fourth quarter of 2017, subject to customary closing conditions.

/*** Advertisement ***/

“This transaction brings together two of the top Marcellus and Utica producers to form a natural gas operating position that will be unmatched in the industry,” said EQT president and CEO Steve Schlotterbeck in a June 19 company statement. “Rice has built an outstanding company with an acreage footprint that is largely contiguous to our existing acreage, which will provide substantial synergies and make this transaction significantly accretive in the first year.”

RELATED: Schlotterbeck Named CEO for EQT, New Executive Appointments Announced

Since the beginning of 2016, the company has added more than 485,000 acres to its development portfolio and has “achieved significant scale in the core of the Marcellus,” Schlotterbeck added.

“Natural gas is the key to a cleaner energy world,” said Rice Energy CEO Daniel J. Rice IV, “and the combination of Rice and EQT, two of the United States’ largest, lowest-cost and most responsible natural gas producers, creates an unparalleled leader in shale gas development that will benefit the environment and our shareholders for many decades to come.”

As the vast majority of the acquired acreage is contiguous with EQT’s existing acreage position, the company anticipates a 50 percent increase in average lateral lengths for future wells located in Greene and Washington counties in Pennsylvania. This same land synergy also complements the infrastructure footprint of EQT Midstream Partners LP, where growth opportunities are expected through drop-downs and additional organic projects. Already a leading producer in the Appalachian Basin, this acquisition will make the company the largest natural gas producer in the United States.

EQT will also obtain Rice’s midstream assets, including a 92 percent interest in Rice Midstream GP Holdings LP, which owns 100 percent of the general partner incentive distribution rights and 28 percent of the limited partner interests in Rice Midstream Partners LP, and the retained midstream assets currently held at Rice. The retained midstream assets, which the company intends to sell to EQT Midstream in the future through drop-down transactions, are expected to generate approximately $130 million of earnings in 2018.

The boards of directors of both companies have unanimously approved the transaction. Completion of the transaction is subject to the approval of both companies’ shareholders, as well as certain customary regulatory and other closing conditions.

Tags: , ,

Comments are closed here.