EQT Corp (EQT) News - Dec 15

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EQT Corporation EQT is considering the divestment of a portfolio of minority interests in wells located in Pennsylvania’s Marcellus shale formation, per a Reuters report. The value of this portfolio could exceed $3 billion.

The company is collaborating with an investment bank to conduct an auction for these stakes, commonly referred to as non-operating interests within the energy sector. Non-operating positions entitle holders to a share of the proceeds from the sale of hydrocarbons without assuming responsibility for drilling or other operational activities. However, they are required to contribute their portion of the associated costs.

EQT Corp intends to divest stakes in assets located throughout Northeast Pennsylvania, generating 700 million cubic feet per day in current production. Chesapeake Energy CHK is the operator of these assets, with EQT holding a 25% non-operating interest. Additionally, various other parties possess smaller ownership stakes in these assets.

EQT Corp’s effort to divest its position, primarily acquired through the $3-billion takeover of Alta Resources in 2021, is part of the company’s broader strategy to expedite the reduction of its $5.9-billion debt load and enhance shareholder returns.

The natural gas sector has seen limited deal activity due to subdued demand in the United States, leading to lower commodity prices and diminished confidence in pursuing acquisitions. However, analysts anticipate an uptick in deal flow next year, driven by increasing export demand that is expected to elevate valuations in the sector.

In October, United State-based natural gas producer Chesapeake Energy initiated discussions with rival gas producer Southwestern Energy SWN regarding a potential acquisition.

The discussions between Chesapeake Energy and Southwestern have been on and off for several months, and Chesapeake Energy is anticipated to explore various options, including potential acquisitions. There is also a consideration of pursuing alternative targets.

If negotiations between the two companies materialize, the resulting entity could surpass EQT to become the largest natural gas-focused exploration and production company in the United States in terms of market value.