Linus Unah – Fourth Estate Contributor
Pittsburgh, PA, United States (4E) – EQT Corp has announced that it would acquire Rice Energy Inc for about $6.7 billion.
The company said it would buy all outstanding shares of Rice common stock for 0.37 shares of EQT common stock and $5.30 in cash per share of Rice common stock.
EQT said in a news release that it would assume about $1.5 billion of net debt and preferred equity as part of the deal.
The transaction is expected to close in the fourth quarter of 2017, subject to customary closing conditions.
Bloomberg reports that the acquisition of Rice Energy Inc.’s holdings in the hydrocarbon-rich Marcellus shale formation would make Pittsburgh, Pennsylvania-based EQT the largest U.S. natural gas producer.
“This transaction brings together two of the top Marcellus and Utica producers to form a natural gas operating position that will be unmatched in the industry,” said Steve Schlotterbeck, EQT’s president and chief executive officer.
“Rice has built an outstanding company with an acreage footprint that is largely contiguous to our existing acreage, which will provide substantial synergies and make this transaction significantly accretive in the first year.”
Schlotterbeck further noted that EQT has added more than 485,000 acres to its development portfolio since the beginning of 2016.
Daniel J. Rice IV, chief executive officer, Rice Energy, said in a joint statement: “Natural gas is the key to a cleaner energy world; and the combination of Rice and EQT – two of the United States’ largest, lowest-cost, and most responsible natural gas producers – creates an unparalleled leader in shale gas development that will benefit the environment and our shareholders for many decades to come.”
EQT expects a 50 percent increase in average lateral lengths for future wells located in Greene and Washington Counties in Pennsylvania.
Citigroup acted as financial advisor and Wachtell, Lipton, Rosen & Katz acted as legal advisor to EQT for the transaction.
Barclays Capital Inc. acted as financial advisor and Vinson & Elkins LLP acted as legal advisor to Rice Energy.
“We will now shift our focus from acquisitions to integration as we work to drive higher capital efficiency through longer laterals; reduce per unit operating costs through operational and G&A synergies; improve our sales portfolio by expanding access to premium markets; and deliver increased value to our shareholders,” Schlotterbeck added.
EQT will also obtain Rice’s midstream assets, including a 92 percent interest in Rice Midstream GP Holdings LP, which owns 100 percent of the general partner incentive distribution rights and 28 percent of the limited partner interests in Rice Midstream Partners LP
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