Pittsburgh-based EQT Corp. will acquire the upstream assets of THQ Appalachia I, also known as Tug Hill, and the gathering and processing assets of THQ-XcL Holdings I, also known as XcL Midstream .
These two assets were acquired from private equity firm Quantum Energy Partners. As part of the agreement, Wil VanLoh, founder and CEO of Quantum Energy Partners, will join EQT’s board of directors. The total cost of the transactions, which are expected to close in the fourth quarter, is $5.2 billion.
“The acquisition of Tug Hill and XcL Midstream checks all the boxes of our M&A guiding principles, including increasing free cash flow per share, net asset value per share, reducing our costs and reducing business risk while maintaining an investment-grade balance sheet,” said EQT President and CEO Toby Rice.
In light of the deal, Rice said the company is doubling its stock repurchase authorization to $2 billion and increasing its 2023 year-end debt reduction target by $2.5 billion. dollars to $4 billion.
“We are extremely pleased to have completed this transaction and, in doing so, we look forward to becoming a principal shareholder of EQT and working closely with EQT’s management team and Board of Directors to improve the long-term value of the company. We believe the company is in a unique and strong position as the nation’s largest natural gas producer, with a differentiated track record of operational excellence, a deep core inventory base, and a leading commitment to ESG. . The assets of Tug Hill and XcL Midstream are complementary to EQT’s existing footprint, and we believe the company is now positioned to create even greater value for its shareholders through this highly strategic combination,” said VanLoh.
The agreement adds 800 MMcfe/d to the heartland of the southwestern Appalachian Mountains in West Virginia on 90,000 net base acres.
“I am very proud of the Tug Hill and XcL Midstream teams and the incredible work they have done in building leading upstream and midstream businesses in the heart of Southwest Appalachia. Quantum has been a great partner and has stood with us in building these businesses over the past decade. People are what make great companies, and EQT, Tug Hill, XcL Midstream and Quantum have great people with shared values,” said Michael Radler, CEO of Tug Hill and XcL Midstream.
The total purchase price of $5.2 billion consists of $2.6 billion in cash and $2.6 billion in EQT common stock.
EQT is a leading independent natural gas production company with operations focused in the cores of the Marcellus and Utica shales in the Appalachian Basin.