EQT acquires more acreage of natural gas-rich Appalachia as Equinor ends operating Lower 48

EQT Corp., the nation’s largest natural gas producer, is swapping some of its Pennsylvania stake in the Marcellus Shale in exchange for Norway’s Equinor ASA, which is divesting its Ohio operations and paying $500 million to settle the overall transaction.

Agreement with Equinor USA Onshore Properties Inc. and affiliates includes 100% of its interests and ownership in the Marcellus and Utica shales in Ohio. The deal would allow the integrated major to completely exit all operating positions in the Lower 48.

In exchange for EQT, it is selling an “undivided” 40% interest in non-operating natural gas assets in northeastern Pennsylvania. The lease represents about 225 million mf/d with no expected production in 2025, the Pittsburgh Independent said.

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“This transaction represents an extremely positive start to our divestiture program and delivers over $1.1 billion in value, including synergies and development plan optimization, for 40% of our non-operating assets while maintaining upside gas prices,” said EQT CEO Toby Z. Rice . .

“We plan to opportunistically dispose of the remainder of our non-performing assets in Northeastern Pennsylvania and have tremendous confidence that we will be able to achieve our deleveraging goals.”

The transaction is expected to close by the end of June.

During the fourth-quarter call, management said it was discussing the sale of non-operating assets, especially international companies seeks exposure to US natural gas.

With the Equinor transaction, EQT would secure:

  • 26,000 net acres in Monroe County, OH, with estimated year-end 2025 (2025e) production of 135 MMcfe/d net, offsetting acreage in operation;
  • 10,000 net acres in Lycoming County, PA, with a 2025e net output of 15 MMcfe/d in existing operating assets;
  • Remaining 16.25% ownership in gathering systems operated by EQT in Lycoming County; and
  • A buyback agreement that would see Equinor buy natural gas from EQT at “basin premium prices” until Q1 2028.

Based on recent tape prices, EQT forecasts total free cash flow for 2025 $75 million from the Equinor deal.

EQT strengthens its natural gas advantage in the Lower 48. Last month it agreed to buy the former entity Equitrans Midstream Corp. The deal would include 27.6 Tcfe of proven reserves on nearly two million net acres. Net production would be around 6.3 Bcfe/d of net volume, with 8 Bcfe/d plus throughput gathering over 3,000 miles of pipeline.

To capture more price growth, EQT has limited gas supplywith closures by March estimated at up to 40 Bcf.

Overall, lower production in recent weeks has helped secure a floor for natural gas futures prices on the New York Mercantile Exchange. However, mild spring seasonal demand and weakness in cash markets kept the first month consistently below $2.00/MMBtu. NGI Spot Gas National Avg. closed last week at 94.5 cents, the lowest point of the year so far.

Through the transaction, Equinor’s average working interest in certain Marcellus natural gas units operated by Chesapeake Energy Corp. will increase to 25.7%, or 10% more.

Appalachian Basin was the last remaining operating company owned by Equinor in the US onshore. The deal allows the integrated major to “enhance the US portfolio and improve profitability by strengthening our gas position in the most robust part of the Appalachian Basin,” said executive vice president Philippe Mathieu. He oversees the Exploration and Production International business unit.

“These assets are well positioned to take advantage of the expected positive developments in the US gas market,” Mathieu said. “The proposed swap improves the robustness of the portfolio with an expected reduction in turnover and carbon intensity. It also means that we have now completely exited all US onshore operating positions,” said Mathieu, adding that the United States remains “a core area for Equinor where we are building a broad energy business in offshore and onshore oil and gas, wind at sea and new technologies. low carbon value chains.”

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