Snow covered transfer lines are seen at the Dominion Cove Point Liquefied Natural Gas terminal in Maryland
NEW YORK: The largest United States natural gas producer, EQT Corp, is acquiring a privately held competitor in a US$5.22bil (RM23.4bil) deal to expand its holdings in the prolific Marcellus shale.
The Pittsburgh-based driller will take over THQ Appalachia I LLC, a Tug Hill-operated company that’s backed by Quantum Energy Partners, in a cash and equity transaction, the company said in a statement on Tuesday.
The purchase will also incorporate Tug Hill’s XcL Midstream LLC, which owns roughly 150km of gas pipelines connecting interstate systems.
It’s the latest in a series of acquisitions made by EQT over the past couple of years as the company seeks to consolidate holdings across the Marcellus in the northeast United States.
The company, led by chief executive officer Toby Rice, purchased assets from Alta Resources Development LLC last year for approximately US$2.9bil (RM13bil).
It also acquired Chevron Corp’s assets in Appalachia for US$735mil (RM3.3bil) in 2020.
The move has largely paid off as a global supply crunch has sent natural gas prices to the highest levels in more than a decade.
While the driller’s ability to profit from the rally has been curbed by hedges against the possibility of a gas slump, the company is still set to generate record amounts of cash from its operations while slashing debt and boosting returns to shareholders.
Its shares have more than doubled over the past year.
EQT has also doubled its share buyback authorisation to US$2bil (RM9bil) and increased its year-end 2023 debt reduction goal by 60% to US$4bil (RM18bil) “as a result of even more confidence in the sustainability of our business,” Rice said in the statement.
“The transaction will lead to increased free cash flow per share, lower costs and reduced business risk,” said Rice.
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