EQT Completes Acquisition of Equitrans Midstream
EQT has completed its acquisition of Equitrans Midstream , creating America's only large-scale, vertically integrated natural gas business. The combined company is projected to have an unlevered NYMEX free cash flow breakeven price of approximately $2.00 per MMBtu, positioning it at the low end of the North American cost curve. EQT has identified over $425 million in annual synergies from the merger, which could further reduce its long-term free cash flow breakeven price.
The integration of Equitrans' midstream assets is expected to improve the economics of EQT's approximately 4,000 drilling locations. The early completion of the transaction resulted in nearly $150 million of savings compared to the original forecast. Three former Equitrans directors have joined the EQT Board of Directors as part of the merger agreement.
EQT ha completato l'acquisizione di Equitrans Midstream, creando l'unico grande business integrato verticalmente nel settore del gas naturale negli Stati Uniti. Si prevede che la società combinata avrà un prezzo di pareggio in termini di flusso di cassa libero non indebitato di circa $2,00 per MMBtu, posizionandosi così nella fascia bassa della curva dei costi nordamericana. EQT ha identificato oltre 425 milioni di dollari in sinergie annuali derivanti dalla fusione, che potrebbero ulteriormente ridurre il prezzo di pareggio del flusso di cassa libero a lungo termine.
L'integrazione degli asset midstream di Equitrans dovrebbe migliorare l'economia dei circa 4.000 siti di perforazione di EQT. Il completamento anticipato della transazione ha comportato risparmi di quasi 150 milioni di dollari rispetto alla previsione originaria. Tre ex direttori di Equitrans si sono uniti al Consiglio di amministrazione di EQT come parte dell'accordo di fusione.
EQT ha consumado su adquisición de Equitrans Midstream, creando el único negocio de gas natural grande e integrado verticalmente en Estados Unidos. Se proyecta que la compañía combinada tendrá un precio de equilibrio de flujo de caja libre no apalancado de aproximadamente $2.00 por MMBtu, posicionándose en el extremo inferior de la curva de costos de América del Norte. EQT ha identificado más de 425 millones de dólares en sinergias anuales provenientes de la fusión, lo que podría reducir aún más su precio de equilibrio de flujo de caja libre a largo plazo.
Se espera que la integración de los activos midstream de Equitrans mejore la economía de los aproximadamente 4,000 sitios de perforación de EQT. La finalización anticipada de la transacción resultó en casi 150 millones de dólares en ahorros en comparación con la previsión original. Tres exdirectores de Equitrans se han unido a la Junta Directiva de EQT como parte del acuerdo de fusión.
EQT는 Equitrans Midstream의 인수를 완료하여 미국에서 유일한 대규모 수직 통합 천연가스 사업을 창출했습니다. 결합된 회사는 비부채 NYMEX 자유 현금 흐름 손익 분기점 가격이 약 $2.00 per MMBtu가 될 것으로 예상되며, 이는 북미 비용 곡선의 낮은 쪽에 위치하게 됩니다. EQT는 합병을 통해 연간 4억 2500만 달러 이상의 시너지를 확인했습니다, 이는 장기적인 자유 현금 흐름 손익 분기점 가격을 더욱 줄일 수 있습니다.
Equitrans의 중간 자산 통합은 EQT의 약 4,000개의 드릴링 위치 경제성을 개선할 것으로 예상됩니다. 거래의 조기 완료는 원래 예측에 비해 거의 1억 5천만 달러의 절감 효과를 가져왔습니다. 세 명의 전 Equitrans 이사가 합병 계약의 일환으로 EQT 이사회에 합류했습니다.
EQT a finalisé son acquisition d'Equitrans Midstream, créant ainsi la seule grande entreprise de gaz naturel intégrée verticalement en Amérique. La société combinée devrait avoir un prix d'équilibre de flux de trésorerie libre non endetté d'environ 2,00 $ par MMBtu, la positionnant à l'extrémité inférieure de la courbe de coûts nord-américaine. EQT a identifié plus de 425 millions de dollars en synergies annuelles issues de la fusion, ce qui pourrait réduire encore son prix d'équilibre de flux de trésorerie libre à long terme.
L'intégration des actifs midstream d'Equitrans devrait améliorer l'économie des environ 4 000 emplacements de forage d'EQT. L'achèvement anticipé de la transaction a permis d'économiser près de 150 millions de dollars par rapport à la prévision initiale. Trois anciens directeurs d'Equitrans ont rejoint le conseil d'administration d'EQT dans le cadre de l'accord de fusion.
EQT hat die Übernahme von Equitrans Midstream abgeschlossen und damit das einzige großangelegte, vertikal integrierte Erdgasunternehmen in Amerika geschaffen. Die kombinierte Firma wird mit einem unverschuldeten NYMEX-Cashflow-Break-even-Preis von etwa 2,00 $ pro MMBtu positioniert, was sie am unteren Ende der nordamerikanischen Kostenkurve positioniert. EQT hat über 425 Millionen Dollar an jährlichen Synergien aus der Fusion identifiziert, die den langfristigen Cashflow-Break-even-Preis weiter senken könnten.
Die Integration der Midstream-Assets von Equitrans soll die Wirtschaftlichkeit von EQT's ca. 4.000 Bohrstandorten verbessern. Der vorzeitige Abschluss der Transaktion führte zu nahezu 150 Millionen Dollar an Einsparungen im Vergleich zur ursprünglichen Prognose. Drei ehemalige Direktoren von Equitrans sind im Rahmen des Fusionsvertrags dem Vorstand von EQT beigetreten.
- Creation of America's only large-scale, vertically integrated natural gas business
- Projected unlevered NYMEX free cash flow breakeven price of $2.00 per MMBtu
- Identified over $425 million in annual synergies
- Early completion resulted in nearly $150 million of savings
- Improved economics for approximately 4,000 drilling locations
- None.
The acquisition of Equitrans Midstream by EQT Corporation is a substantial development in the natural gas sector. This consolidation creates a vertically integrated natural gas business, which could significantly impact EQT's financials and market position. The projected unlevered NYMEX free cash flow breakeven price of approximately $2.00 per MMBtu is notably low, suggesting high efficiency and robust free cash flow generation. This low breakeven point positions EQT well to withstand fluctuations in natural gas prices, ensuring stability and potential profitability even during downturns in the commodity cycle.
Moreover, the integration is expected to generate over $425 million in annual synergies. This could further reduce the breakeven price, improving long-term profitability and cash flow. The early completion of the transaction, resulting in $150 million of immediate savings, demonstrates effective management and strategic planning. From a financial perspective, this acquisition is likely to enhance EQT's competitive edge and long-term financial stability.
This acquisition is not just a financial maneuver; it fundamentally changes the market dynamics for EQT. By incorporating Equitrans' midstream assets, EQT can significantly improve the economics of its 4,000 drilling locations. This integration gives EQT a unique leverage in both production and transportation of natural gas. Given the increasing global demand for natural gas, this vertically integrated model enables EQT to control more of the value chain, which can lead to optimized operations and reduced costs.
In addition, the move aligns perfectly with current market trends where energy companies are focusing on integration to improve efficiency and reduce exposure to volatile commodity prices. Investors should view this positively, as it suggests that EQT is strategically positioning itself to maximize value and returns in a potentially lucrative global market.
The legal structuring and advisory roles played by Kirkland & Ellis LLP and other legal advisors in this transaction are noteworthy. Mergers of this scale require meticulous regulatory and compliance oversight to ensure a smooth transition and integration. The involvement of high-profile legal firms indicates that EQT is taking the necessary steps to mitigate legal risks associated with the acquisition.
Additionally, the inclusion of three former Equitrans directors into EQT's Board of Directors is a strategic move that can facilitate smoother integration and provide continuity in corporate governance. This strengthens EQT's leadership team with experienced professionals who have a deep understanding of Equitrans' operational and strategic priorities, potentially leading to a more seamless and effective merger process.
The merger of EQT and Equitrans creates America's only large-scale, vertically integrated natural gas business. The combined company is projected to have an unlevered NYMEX free cash flow breakeven1 price of approximately
EQT has identified more than
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.
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
Rice continued, "We are wasting no time unleashing our integration team, which has a successful track record of rapidly integrating three large-scale acquisitions over the past several years, to efficiently combine these organizations. This combination leaves EQT in a tremendously advantaged position to compete and win as we enter the global era of natural gas."
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 Board of Directors, effective immediately.
Advisors
Guggenheim Securities, LLC acted as lead financial advisor and RBC Capital Markets, LLC acted as a financial advisor to EQT. Kirkland & Ellis LLP served as EQT's legal counsel on the transaction. Barclays and Citi served as financial advisors to Equitrans, and Latham & Watkins LLP served as legal counsel to Equitrans.
Investor Contact:
Cameron Horwitz
Managing Director, Investor Relations & Strategy
412.395.2555
Cameron.Horwitz@eqt.com
Media Contact:
Kelly Kimberly
FGS Global
713.822.7538
EQT@fgsglobal.com
About EQT Corporation
EQT Corporation is a leading independent natural gas production company with operations focused in the Appalachian Basin. We are dedicated to responsibly developing our world-class asset base and being the operator of choice for our stakeholders. By leveraging a culture that prioritizes operational efficiency, technology and sustainability, we seek to continuously improve the way we produce environmentally responsible, reliable and low-cost energy. We have a longstanding commitment to the safety of our employees, contractors, and communities, and to the reduction of our overall environmental footprint. Our values are evident in the way we operate and in how we interact each day – trust, teamwork, heart, and evolution are at the center of all we do. To learn more, visit eqt.com.
Cautionary Statements Regarding Forward-Looking Statements
This news release contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Statements that do not relate strictly to historical or current facts are forward-looking. Without limiting the generality of the foregoing, forward-looking statements contained in this news release specifically include the expectations of plans, strategies, objectives and growth and anticipated financial and operational performance of EQT Corporation and its subsidiaries (collectively, the Company), including the Company's ability to achieve the intended operational, financial and strategic benefits from its acquisition of Equitrans, the Company's ability to integrate the operations of Equitrans in a successful manner and in the expected time period, the combined company's projected unlevered NYMEX free cash flow breakeven price and projected synergies.
The forward-looking statements included in this news release involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The Company has based these forward-looking statements on current expectations and assumptions about future events, taking into account all information currently known by the Company. While the Company considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks and uncertainties, many of which are difficult to predict and beyond the Company's control. These risks and uncertainties include, but are not limited to, volatility of commodity prices; the costs and results of drilling and operations; uncertainties about estimates of reserves, identification of drilling locations and the ability to add proved reserves in the future; the assumptions underlying production forecasts; the quality of technical data; the Company's ability to appropriately allocate capital and other resources among its strategic opportunities; access to and cost of capital, including as a result of rising interest rates, inflation and other economic uncertainties; the Company's hedging and other financial contracts; inherent hazards and risks normally incidental to drilling for, producing, transporting and storing natural gas, NGLs and oil; cybersecurity risks and acts of sabotage; availability and cost of drilling rigs, completion services, equipment, supplies, personnel, oilfield services and sand and water required to execute the Company's exploration and development plans, including as a result of supply chain and inflationary pressures; risks associated with operating primarily in the Appalachian Basin and obtaining a substantial amount of the Company's midstream services from a single provider; the ability to obtain environmental and other permits and the timing thereof; government regulation or action, including regulations pertaining to methane and other greenhouse gas emissions; negative public perception of the fossil fuels industry; increased consumer demand for alternatives to natural gas; environmental and weather risks, including the possible impacts of climate change; the Company's ability to integrate the Equitrans' operations and assets in a successful manner and in the expected time period and the possibility that any of the anticipated benefits and projected synergies of such acquisition will not be realized or will not be realized within the expected time period; and disruptions to the Company's business due to acquisitions, divestitures and other strategic transactions. These and other risks are described under the "Risk Factors" section in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, the "Risk Factors" section included in the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024, and other documents the Company files from time to time with the Securities and Exchange Commission.
Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by law, the Company does not intend to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise.
Non-GAAP Disclosures
Adjusted Operating Cash Flow, Free Cash Flow and Unlevered Free Cash Flow
Adjusted operating cash flow is defined as net cash provided by operating activities less changes in other assets and liabilities. Free cash flow is defined as adjusted operating cash flow less accrual-based capital expenditures, excluding capital expenditures attributable to noncontrolling interests. Unlevered free cash flow is defined as free cash flow, less interest expense. Adjusted operating cash flow, free cash flow and unlevered free cash flow are non-GAAP supplemental financial measures the Company's management believes provide useful information to investors regarding the Company's liquidity, including the Company's ability to generate cash flow in excess of its capital requirements and return cash to shareholders.
The Company has not provided projected net cash provided by operating activities or reconciliations of projected adjusted operating cash flow, free cash flow and unlevered free cash flow to projected net cash provided by operating activities, the most comparable financial measure calculated in accordance with GAAP. The Company is unable to project net cash provided by operating activities for any future period because this metric includes
the impact of changes in operating assets and liabilities related to the timing of cash receipts and disbursements that may not relate to the period in which the operating activities occurred. The Company is unable to project these timing differences with any reasonable degree of accuracy without unreasonable efforts such as predicting the timing of its payments and its customers' payments, with accuracy to a specific day, months in advance. Furthermore, the Company
does not provide guidance with respect to its average realized price, among other items, that impact reconciling items between net cash provided by operating activities and adjusted operating cash flow and free cash flow, as applicable. Natural gas prices are volatile and out of the Company's control, and the timing of transactions and the income tax effects of future transactions and other items are difficult to accurately predict. Therefore, the Company is unable to provide projected net cash provided by operating activities, or the related reconciliations of projected adjusted operating cash flow free cash flow and unlevered free cash flow to projected net cash provided by operating activities, without unreasonable effort.
1Unlevered NYMEX free cash flow breakeven is defined as the average Henry Hub price needed to generate positive unlevered free cash flow, a non-GAAP financial measure. See the Non-GAAP Disclosures section of this news release for the definition of, and other important information regarding, this non-GAAP financial measure.
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SOURCE EQT Corporation (EQT-IR)
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