In a groundbreaking move, EQT Corp, the top natural gas producer in the U.S., has announced its acquisition of Equitrans Midstream in an all-stock deal worth approximately $14 billion, marking a significant development in the natural gas sector. This strategic decision comes amidst a backdrop of historically low commodity prices and heightened merger activities within the U.S. shale oil and gas market, which saw $250 billion in deals in 2023.
The merger is set to revolutionize EQT’s operational landscape, enabling the company to optimize production and transportation costs by integrating an extensive network of over 2,000 miles of pipelines. EQT’s finance chief emphasized the importance of maintaining a competitive edge by operating at the lower end of the cost curve in a challenging market environment.
Despite the potential synergies amounting to $250 million annually, investors have expressed apprehensions regarding the combined entity’s substantial debt of $13.4 billion. This sentiment was reflected in the stock market, with EQT shares witnessing an 8% decline while Equitran shares rose by 2.7% during midday trading.
The acquisition is expected to be finalized in the fourth quarter, with each outstanding share of Equitrans common stock being exchanged for 0.3504 shares of EQT, resulting in an equity value of approximately $5.5 billion. Following the completion of the deal, EQT shareholders will hold around 74% of the combined company, with Equitrans shareholders retaining the remaining stake.