EQT Corp. said May 8 it will replace three long-serving members of its board of directors, though the move does little to cool down the proxy battle the Appalachia shale producer is facing.

The company has nominated Janet L. Carrig, James T. McManus II and Valerie A. Mitchell to replace the outgoing directors, which include Board Chairman James Rohr, A. Bray Cary Jr. and Lee T. Todd Jr., who will not be seeking reelection at the 2019 annual meeting to be held in July.

On May 9, Toby and Derek Rice, EQT shareholders who are leading an activist campaign against the company, said the board changes are not enough to bring about the change needed at EQT. This also followed a lawsuit against EQT filed by Toby Rice in late April that he later dropped.

“We are pleased that three long-serving directors who have overseen significant value destruction at EQT will be stepping down,” the Rice brothers said in a statement. “It is disappointing to us that it took substantial time and effort on our part to prompt this positive change. However, we do not believe this reactionary move by the board is sufficient to achieve the fundamental changes needed at EQT.”

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Since December 2018, Toby and Derek have voiced concerns over EQT management and operational efficiencies. At the heart of the dispute is the brother’s claim that the current EQT management team haven’t fulfilled the potential from the company’s merger with Rice Energy—the company the brothers founded alongside older brother Daniel Rice who currently serves on the EQT board.

The Rice brothers started Rice Energy while still in their mid-20s and quickly grew the company from a family-owned operation into a billion-dollar enterprise in the span of a decade, eventually selling the company to EQT in 2017 for $8.2 billion.

At the time of the sale, Rice Energy had roughly 250,000 net-acre position in the core of the Marcellus and Utica shale plays. The acquisition was set to make EQT the largest producer of natural gas in the U.S.

Instead, Rice brothers, Toby and Derek, insist that EQT has become the “highest-cost operator in the Appalachian Basin” due to current management.

“As we and other shareholders have been saying for many months, the problem at EQT is that the leadership team lacks the vision, ambition and execution capability to deliver on the promise of EQT’s outstanding assets,” the Rice brothers said. “Modest board changes without a leadership team change will not, in our view, put EQT on a path to unlock the true potential of its asset base.”

The brothers in March also nominated nine candidates to the EQT board, comprising 12 directors, which also included installing Toby Rice as CEO.

Toby and Derek Rice own around a 3.1% stake in EQT, according to a report by Reuters.

Emily Patsy can be reached at epatsy@hartenergy.com.

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