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Released March 12, 2024 | SUGAR LAND
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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--After splitting in two in 2018, gas player EQT Corporation (NYSE:EQT) (Pittsburgh, Pennsylvania) and midstream company Equitrans Midstream (NYSE:ETRN) (Pittsburgh) joined the queue of companies tying the knot in an all-stock $5.5 billion deal.
It's something of an era of consolidation in the oil and gas industry. Last year saw Exxon Mobil Corporation (NYSE:XOM) (Spring, Texas) make its largest acquisition since merging with Mobil in 1999 with the $60 billion deal for shale giant Pioneer Natural Resources (NYSE:PXD) (Irving, Texas).
Not to be outdone, Chevron Corporation (NYSE:CVX) (San Ramon, California) followed up with a bid for Hess Corporation (NYSE:HES) (New York, New York), grabbing exposure to North Dakota shale and oil offshore Guyana in the process, assuming the deal goes through.
For natural gas, EQT President and chief executive officer Toby Rice said the offer was about staying competitive.
"As we enter the global era of natural gas, it is imperative for U.S. natural gas companies to evolve their business models to compete on the global stage against vertically integrated rivals." he said in a statement.
Gas is seen as a bridge to a cleaner future, but it also gained in importance after the Russian invasion of Ukraine in 2022 disrupted global flows of natural gas.
Equitrans is midstream focused, while EQT has considerable acreage in the Appalachian shale basin, the largest inland gas producer in the United States.
Spread out over parts of Pennsylvania, New York and West Virginia, and including both the Marcellus and Utica shale deposits, Appalachia is expected to produce about 36 billion cubic feet of natural gas per day (Bcf/d) this month, besting its closest rival, the Permian, by more than 10 Bcf/d.
Combined, the companies will boast 27.6 trillion cubic-feet equivalent of reserves spread out over 1.9 million net acres. Additionally, the merger would net more than 2,000 miles of midstream infrastructure, including the Mountain Valley Pipeline, a project well behind schedule because of legal challenges. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Pipelines Project Database can click here for a list of active Mountain Valley Pipeline project reports.
EQT added that the merger would cut its break-even operating costs and generate more free cash flow. Under the terms of the agreement, existing shareholders of EQT would own 74% of the combined company, while Equitrans would take the rest.
"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," said EQT's president.
Industrial Info is tracking 14 capital Equitrans Projects, worth $2.86 billion. Subscribers can click here for the project list. In a preview of 2024, consultant group Wood Mackenzie said in December that it expected most major energy companies would invest more on oil and gas production, while accelerating their energy transition strategies to focus more on renewables.
"More cash-funded M&A (mergers and acquisitions) also seems likely," said Tom Ellacott, WoodMac's senior vice president of corporate oil and gas.
The all-stock offer represented an implied value of $12.50 per share of Equitrans, a premium based on Monday trading levels. The deal is expected to close in the fourth quarter.
Equitrans spun off from EQT as a stand-alone entity in 2018.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
It's something of an era of consolidation in the oil and gas industry. Last year saw Exxon Mobil Corporation (NYSE:XOM) (Spring, Texas) make its largest acquisition since merging with Mobil in 1999 with the $60 billion deal for shale giant Pioneer Natural Resources (NYSE:PXD) (Irving, Texas).
Not to be outdone, Chevron Corporation (NYSE:CVX) (San Ramon, California) followed up with a bid for Hess Corporation (NYSE:HES) (New York, New York), grabbing exposure to North Dakota shale and oil offshore Guyana in the process, assuming the deal goes through.
For natural gas, EQT President and chief executive officer Toby Rice said the offer was about staying competitive.
"As we enter the global era of natural gas, it is imperative for U.S. natural gas companies to evolve their business models to compete on the global stage against vertically integrated rivals." he said in a statement.
Gas is seen as a bridge to a cleaner future, but it also gained in importance after the Russian invasion of Ukraine in 2022 disrupted global flows of natural gas.
Equitrans is midstream focused, while EQT has considerable acreage in the Appalachian shale basin, the largest inland gas producer in the United States.
Spread out over parts of Pennsylvania, New York and West Virginia, and including both the Marcellus and Utica shale deposits, Appalachia is expected to produce about 36 billion cubic feet of natural gas per day (Bcf/d) this month, besting its closest rival, the Permian, by more than 10 Bcf/d.
Combined, the companies will boast 27.6 trillion cubic-feet equivalent of reserves spread out over 1.9 million net acres. Additionally, the merger would net more than 2,000 miles of midstream infrastructure, including the Mountain Valley Pipeline, a project well behind schedule because of legal challenges. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Pipelines Project Database can click here for a list of active Mountain Valley Pipeline project reports.
EQT added that the merger would cut its break-even operating costs and generate more free cash flow. Under the terms of the agreement, existing shareholders of EQT would own 74% of the combined company, while Equitrans would take the rest.
"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," said EQT's president.
Industrial Info is tracking 14 capital Equitrans Projects, worth $2.86 billion. Subscribers can click here for the project list. In a preview of 2024, consultant group Wood Mackenzie said in December that it expected most major energy companies would invest more on oil and gas production, while accelerating their energy transition strategies to focus more on renewables.
"More cash-funded M&A (mergers and acquisitions) also seems likely," said Tom Ellacott, WoodMac's senior vice president of corporate oil and gas.
The all-stock offer represented an implied value of $12.50 per share of Equitrans, a premium based on Monday trading levels. The deal is expected to close in the fourth quarter.
Equitrans spun off from EQT as a stand-alone entity in 2018.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
