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EQT becomes largest US gas producer with Rice deal

19 Jun 2017 17:56 (+01:00 GMT)
EQT becomes largest US gas producer with Rice deal

Houston, 19 June (Argus) — Independent producer EQT will purchase Rice Energy for $6.7bn, combining the two companies' acreage in Appalachia to make EQT the largest natural gas producer in the US.

EQT will acquire all the outstanding shares of Rice common stock for $6.7bn and will assume $1.5bn of Rice's debt and equity in a transaction expected to close in the fourth quarter. EQT said the deal would make it the largest US gas producer, with a 2017 combined production of 1.3 Tcf of natural gas equivalent (Tcfe/d) (37bn m³/d).

"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.

EQT will acquire 187,000 net acres in the Marcellus shale and 65,000 net acres in the Utica, with 1.3 Bcfe/d of current production. EQT will also obtain Rice's midstream assets.

The deal will increase EQT's access to premium Gulf coast and midcontinent markets through a combined firm transportation portfolio, Schlotterbeck said during a call about the merger today. The company also expects to benefit from additional infrastructure and optimization efforts, rig allocations, pad sites and water access.

EQT now plans to shift its focus from acquisitions to integration, driving efficiency through the use of longer laterals and reducing per-unit operating costs.

As the vast majority of the acquired acreage is contiguous with EQT's existing acreage position, EQT anticipates a 50pc increase in average lateral lengths for future wells located in Greene and Washington counties in Pennsylvania.

The boards of directors of both companies have unanimously approved the transaction. Completion of the transaction is subject to the approval of both EQT and Rice shareholders, as well as regulatory and other closing conditions.