Equitrans Midstream (ETRN) stocks rose by 8.5% before the market opened on Monday after EQT Corp. (NYSE:EQT), the top U.S. natural gas producer, announced its intention to acquire Equitrans in a deal valued at over $35 billion, to be paid entirely in stocks.
This acquisition aims to create the first large-scale, integrated natural gas producer in America, boasting a low-cost structure that offers investors a solid exposure to natural gas prices while minimizing risks.
The combined company will hold approximately 27.6 trillion cubic feet equivalent (cfe) of proved reserves spread across roughly 1.9 million net acres. It will also produce around 6.3 billion cfe per day, with over 8 billion cfe per day of gathering throughput across more than 3,000 miles of pipelines. Under the terms of the agreement, each Equitrans common share will be exchanged for 0.3504 shares of EQT common stock, valuing Equitrans at $12.50 per share based on EQT’s average price over the 30 days ending on March 8, while Equitrans closed Friday at $11.15.
Following the acquisition, EQT’s existing shareholders will own approximately 74% of the combined company, while Equitrans’ shareholders will own about 26%. However, the deal’s completion hinges on the Federal Energy Regulatory Commission’s authorization of the Mountain Valley Pipeline. Equitrans will have three representatives joining EQT’s board, and the combined company will be led by EQT’s executive management team, headquartered in Pittsburgh.
Key Points:
- Acquisition Details: EQT Corp., the leading U.S. natural gas producer, plans to acquire Equitrans Midstream in a deal valued at over $35 billion, using stocks for payment. This move is strategic for both companies as it positions them as a formidable force in the natural gas industry.
- Strategic Positioning: The acquisition aims to create the first large-scale, integrated natural gas producer in the U.S. This integration promises a low-cost structure, ensuring that investors gain exposure to natural gas prices with minimized risks, making it an attractive investment opportunity.
- Combined Company Strengths: The combined company will possess significant reserves, extensive production capabilities, and a vast network of pipelines. It will hold 27.6 trillion cubic feet equivalent (cfe) of proved reserves, with substantial production and gathering throughput capabilities across thousands of miles of pipeline infrastructure.
- Deal Structure: Equitrans shareholders will receive 0.3504 shares of EQT stock for each Equitrans share they own. This values Equitrans at $12.50 per share, based on EQT’s stock performance over the 30 days prior to March 8, which is higher than Equitrans’ closing price on the preceding Friday.
- Ownership Distribution: After the acquisition, EQT’s existing shareholders will own approximately 74% of the combined company, while Equitrans’ shareholders will own around 26%.
- Contingencies: The deal’s completion depends on the Federal Energy Regulatory Commission’s authorization of the Mountain Valley Pipeline, a critical aspect for the merger’s success and integration.
- Leadership and Governance: Equitrans will have three representatives on EQT’s board, indicating a degree of influence in the combined company’s decision-making. The combined company will be led by EQT’s executive management team, with its headquarters based in Pittsburgh, emphasizing continuity in leadership and operational management.
About EQT Corporation
EQT Corporation is a big company that makes natural gas. They focus on the Appalachian Basin area. They want to be really good at what they do and make sure everyone involved is happy. They use technology and try to be kind to the environment while making energy. They care a lot about safety for their workers and for the environment. They believe in trust, teamwork, kindness, and always trying to get better. These values guide everything they do.
About Equitrans Midstream
Equitrans Midstream Corporation owns valuable resources in the Appalachian Basin and is the main company behind EQM Midstream Partners. It’s one of the biggest collectors of natural gas in the United States. Equitrans focuses on moving and storing gas, collecting gas, and providing water services to help with natural gas production in the Marcellus and Utica regions.
The company has been around for 140 years and started operating independently in 2018 with a goal to become the best midstream services provider in North America. Equitrans is committed to meeting the increasing demand for clean energy in America while also prioritizing its environmental, social, and governance practices. This means it works hard to protect the environment, create a positive workplace for its employees, support local communities, and provide ongoing value for its customers and shareholders.
Summary
