The combined company will have a pipeline infrastructure spanning over 3,218km, proved reserves of 27.6Tcfe across nearly 1.9 million net acres, net production of 6.3Bcfe/d, and gathering throughput exceeding 8Bcfe/d, facilitated across more than 4,828km of pipeline
EQT and Equitrans Midstream have signed a definitive merger agreement. (Credit: Tobias Lindner from Pixabay)
EQT has agreed to acquire Equitrans Midstream (ETRN) in an all-stock deal in a move to create a major vertically integrated natural gas enterprise in the US, with an initial enterprise value of more than $35bn.
Listed on the New York Stock Exchange (NYSE), EQT is a natural gas production company with a focus on the Appalachian Basin.
Equitrans Midstream, which also has a presence in the Appalachian Basin, serves as the parent entity of EQM Midstream Partners, a US-based natural gas gathering company.
Also listed on the NYSE, Equitrans Midstream specialises in gas transmission and storage systems, gas gathering systems, and water services, all of which bolster natural gas exploration and production activities throughout the basin.
The merged entity will have a pipeline infrastructure spanning over 3,218km, featuring significant overlap and connectivity within EQT’s primary operational zones.
Additionally, the combined company will hold 27.6 trillion cubic feet equivalent (Tcfe) of proved reserves across nearly 1.9 million net acres. It will have a net production of 6.3 billion cubic feet equivalent per day (Bcfe/d) and gathering throughput exceeding 8Bcfe/d, facilitated across more than 4,828km of pipeline.
EQT president and CEO Toby Rice said: “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.
“As we enter the global era of natural gas, it is imperative for US natural gas companies to evolve their business models to compete on the global stage against vertically integrated rivals.”
Under the terms of the agreement, each share of Equitrans Midstream will be swapped for 0.3504 shares of EQT. This translates to an estimated value of $12.5 per share of Equitrans Midstream, calculated based on the volume-weighted average price of EQT common stock over the 30 days ending on 8 March 2024.
Following the completion of the transaction, existing shareholders of EQT are expected to hold around 74% of the combined company. Equitrans Midstream’s shareholders will own the remaining stake of around 26%.
Equitrans Midstream executive chairman Thomas Karam said: “This strategic transaction with EQT is the culmination of an exhaustive process conducted by the ETRN board to determine the best strategic path forward for our shareholders, employees, and stakeholders.
“Combining with EQT creates a premier vertically integrated natural gas business that is a game changer for the natural gas industry and Appalachian Basin. The transaction delivers full and fair value to ETRN shareholders and provides the opportunity to participate in future value growth as EQT executes on its strategy.”
The transaction is anticipated to conclude in Q4 2024, pending necessary regulatory approvals, consent from shareholders of EQT and Equitrans Midstream, and fulfilment of other standard closing prerequisites.
Guggenheim Securities served as the primary financial adviser, with RBC Capital Markets providing additional financial advisory support to EQT. Legal counsel for EQT on the transaction is being provided by Kirkland & Ellis.
Equitrans Midstream received financial advisory services from Barclays and Citi, with legal counsel provided by Latham & Watkins.