(Source: Shutterstock.com)
Appalachia E&P EQT Corp. has closed an all-stock deal to buy and Equitrans Midstream Corp. for roughly $5.45 billion.
Post transaction, EQT aims to swiftly vertically integrate Equitrans' midstream assets, the most notable of which is the Mountain Valley Pipeline.
EQT said the combined company is projected to have an unlevered NYMEX free cash flow breakeven price of approximately $2.00/ MMBtu, “which is at the low end of the North American cost curve and ensures robust free cash flow generation through all parts of the commodity cycle,” EQT said in a July 22 press release.
EQT additionally has identified more than $425 million of annual synergies associated with the combination that could drive EQT's long-term free cash flow breakeven price down even further, EQT said.
EQT will sacrifice some free cash flow to pay off Equitrans’ debt of between $7.6 billion and $8 billion. EQT will also sell assets to reduce borrowings. Including equity and debt, the deal is valued at roughly $13 billion. EQT has said it sees a clear path to $5 billion in divestitures and began a divestiture program in April with an asset swap with Equinor in the Appalachian Basin.
The integration of Equitrans' midstream assets immediately improves the economics of EQT's approximately 4,000 drilling locations, unlocking unrivaled terminal value at a time when demand for natural gas is inflecting both domestically and abroad, the company said.
Toby Z. Rice, president and CEO of EQT, said, "We are excited to complete this highly strategic transaction significantly ahead of our original timeline, and welcome both Equitrans employees and shareholders to EQT. The early close resulted in nearly $150 million of savings relative to our original forecast and brings forward our de-leveraging and synergy capture timetables."
In conjunction with the closing, and as previously announced under the terms of the merger agreement, three former Equitrans directors, Vicky A. Bailey, Thomas F. Karam, and Robert F. Vagt, have joined the EQT’s board effective immediately.
Guggenheim Securities LLC acted as lead financial adviser and RBC Capital Markets LLC acted as a financial adviser to EQT. Kirkland & Ellis LLP served as EQT's legal counsel on the transaction.
Barclays and Citi served as financial advisers to Equitrans and Latham & Watkins LLP served as legal counsel to Equitrans.
Recommended Reading
Endeavor Energy Founder Autry Stephens Dies at 86
2024-08-16 - Stephens created a legacy in the Permian Basin that Endeavor said will continue to shape the future of the company.
Post Oak Backs New Permian Team, But PE Faces Uphill Fundraising Battle
2024-10-11 - As private equity begins the process of recycling inventory, likely to be divested from large-scale mergers, executives acknowledged that raising funds has become increasingly difficult.
HNR Acquisition to Rebrand as EON Resources Inc.
2024-08-29 - HNR’s name change to EON Resources Inc. and a new ticker symbol, “EONR,” will take effect when trading commences on Sept. 18.
Beth McDonald Appointed SM Energy COO
2024-09-09 - Beth McDonald joins SM Energy as its new executive vice president and COO, bringing with her about 20 years of experience as an executive at Pioneer Natural Resources.
Sheffield: E&Ps’ Capital Starvation Not All Bad, But M&A Needs Work
2024-10-04 - Bryan Sheffield, managing partner of Formentera Partners and founder of Parsley Energy, discussed E&P capital, M&A barriers and how longer laterals could spur a “growth mode” at Hart Energy’s Energy Capital Conference.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.