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EQT announces the acquisition of Chevron's Appalachia assets

Published by , Editorial Assistant
World Pipelines,

EQT Corporation has announced that it has entered into a definitive purchase and sale agreement with Chevron U.S.A. Inc. under which EQT will acquire Chevron's upstream and midstream assets located in the Appalachian Basin for US$735 million, subject to customary adjustments at closing.

Asset highlights:

  • Current net production of approximately 450 million ft3/d; 75% gas / 25% liquids.
  • Approximately 100 work-in-progress wells.
  • Approximately 125 000 core net Marcellus acres; 335 000 total net Marcellus acres.
  • 31% ownership interest in Laurel Mountain Midstream.
  • Two water systems and associated infrastructure located in PA and WV.

Transaction highlights:

  • Low-risk, strategic bolt-on acquisition.
  • Valuation underwritten by PDP value and protected through hedging.
  • Extensive work-in-progress inventory enables capital efficient development.
  • Favourable operating cost structure immediately improves margins and boosts free cash flow profile.
  • Expected to be accretive to leverage, free cash flow per share and NAV per share.

President and CEO Toby Rice stated, "This acquisition is a natural bolt-on extension of EQT's dominant position in the core of the southwest Marcellus and supplements our already impressive asset base. With the purchase price underpinned by PDP value, the extensive work-in-progress well inventory, core undeveloped acreage and water assets provide material value upside. Our unique knowledge of these assets, coupled with our superior operating model, puts these assets in the right hands to maximize the embedded value."

Rice continued, "The digital work environment and business processes that we have created will allow for the seamless integration of these assets into our existing portfolio, while the favourable financial impacts will benefit both equity and debt holders. This transaction represents another strategic step this team is taking to create value for all stakeholders, while enhancing the durability and sustainability of our business."

Jefferies LLC acted as financial advisor to EQT on the transaction.

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