EQT Corp. and Equinor have agreed to a large-scale acreage swap in the Appalachian Basin, the companies said in separate press releases on April 15.

Under the terms of the transaction, Equinor will sell 100% of its interest in and operatorship in the Marcellus and Utica shales in southeastern Ohio. In exchange, EQT will provide 40% of non-operated interest in the Northern Marcellus in Pennsylvania. At closing, the deal will mean that Equinor will have fully exited all operated positions onshore U.S.

Equinor will pay cash consideration of $500 million to EQT to “balance the overall transaction,” Equinor said as the company swaps resources that contribute to growing cashflows and further reduce the international company’s portfolio.

EQT said the deal for Equinor’s natural gas assets in Northeast Pennsylvania, represents approximately 225 MMcf/d of forecasted 2025 net production.  Aside from $500 million payment from Equinor, based on recent strip pricing, EQT forecasts aggregate 2025 free cash flow of approximately $75 million from the non-cash consideration.

EQT said it would receive the following assets and interests in the transaction:

  • ~26,000 net acres in Monroe County, Ohio, with estimated 2025 net production of about 135 MMcfe/d directly offsetting EQT-operated acreage;
  • ~10,000 net acres in Lycoming County, Pennsylvania, with 2025E net production of ~15 MMcfe/d in existing EQT-operated assets;
  • The remaining 16.25% ownership in EQT-operated gathering systems servicing the E&P’s core operated acreage in Lycoming County, Pennsylvania; and
  • A gas buy-back agreement whereby Equinor will purchase gas from EQT at a premium to in-basin pricing through the first quarter of 2028.

The buyback agreement from Equinor will follow its increased average working interest to 25.7% from 15.76% in certain Chesapeake Energy-operated Northern Marcellus gas units. Equinor will cover pre-existing gas sales commitments by entering into the gas buy-back agreement with EQT.

"This transaction marks an extremely positive start to our divestiture program, bringing in over $1.1 billion of value, including synergies and development plan optimization, for 40% of our non-operated assets, while retaining gas price upside,” EQT President and CEO Toby Z. Rice said. “We plan to opportunistically divest the remaining portion of our non-operated assets in Northeast Pennsylvania and have tremendous confidence in being able to achieve our de-leveraging goals."    

Philippe Mathieu, executive vice president for Exploration and Production International at Equinor, said the transaction high-grades its U.S. portfolio and improves its profitability by strengthening the company’s gas position in the most robust part of the Appalachian Basin.

“These assets are well positioned to leverage anticipated positive developments in the U.S. gas market,” Mathieu said. “The proposed swap improves portfolio robustness with an expected reduction in well break-evens and upstream carbon intensity.”

“The US is a core area for Equinor where we’re building a broad energy business within offshore and onshore oil and gas, offshore wind, and new low-carbon value chains,” Mathieu said.

The transaction is subject to customary closing adjustments, required regulatory approvals and clearances, and is expected to close in late second quarter of 2024. EQT expects no cash tax leakage associated with the transaction. 

Jefferies LLC acted as lead financial adviser and TD Securities acted as a financial adviser to EQT. Kirkland & Ellis LLP is serving as EQT's legal counsel.