EQT Acquires Alta Resources Development’s Upstream and Midstream Business
NYSE-listed EQT Corp. has entered into a purchase agreement with Alta Resources Development LLC (Alta) to acquire all of the membership interests in its wholly-owned subsidiaries, Alta Marcellus Development LLC (Alta Marcellus) and ARD Operating LLC (ARD), in a corporate transaction valued at approximately US$2.925 billion payable in cash and stock, subject to customary closing adjustments. Alta Marcellus and ARD collectively hold all of Alta’s upstream and midstream assets. The transaction has unanimously been approved by the board of directors of EQT.
Under the terms of the purchase agreement, EQT will acquire Alta Marcellus and ARD, in exchange for a total consideration of US$2.925 billion, comprised of an initial cash consideration of US$1.0 billion and additional equity worth approximately US$1.925 billion, payable via the issuance of approximately 105 million shares of EQT common stock valued at a price of about US$18.3 per share (based on the 30-day VWAP as of May 5th, 2021). EQT shares issued as part of the transaction will be distributed directly to Alta shareholders, which represent a diverse set of financial institutions and individuals. No Alta shareholder will receive more than 5% of EQT’s pro-forma outstanding shares of common stock in connection with the transaction.
Alta Marcellus and ARD operate as wholly-owned subsidiaries of Alta, and collectively hold its entire upstream and midstream business. The companies are engaged in the exploration and development of shale oil & gas assets, with a primary focus on operated and non-operated acreage in the Marcellus shale of northeast Pennsylvania. The transaction also includes gathering and processing facilities, with water pipelines and freshwater impoundments under their midstream business.
The companies collectively hold approximately 300,000 core net acres, out of which approximately 222,000 acres are operated and 78,000 acres are non-operated, located in Centre, Clinton, Lycoming, Tioga, Bradford, and Sullivan counties, Pennsylvania. The acreage is 98% held by production, and includes 381 operated wells, 93 operated pads and six currently drilled but uncompleted (DUC) wells. The current average daily production of the 50%-operated assets is approximately 1.0 billion cubic feet per day (Bcf/d). The midstream assets acquired include 300 miles of in-place owned and operated gathering lines and compression, 100 miles of water pipelines, and 14 freshwater impoundments.
“The acquisition of Alta’s assets represents an attractive entry into the Northeast Marcellus while accelerating our deleveraging path, providing attractive free cash flow per share accretion for our shareholders and adding highly economic inventory to EQT’s already robust portfolio. In addition to increasing our long-term optionality, we believe this transaction accelerates both our path back to investment grade metrics and our shareholder return initiatives,” said Toby Rice, President and CEO of EQT.
Headquartered in Pittsburgh, EQT is engaged in natural gas production operations across the Appalachian Basin and Marcellus Shale, and is one of the largest gas producers in the United States.
BofA Securities is acting as financial advisor to EQT, while Citigroup Global Markets is acting as exclusive financial advisor to Alta Resources.
The transaction is subject to customary closing conditions, including EQT’s shareholders approval, and is expected to close in Q3-2021, with an effective date of January 1, 2021.