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  • EQT Announces Strategic Bolt-On Acquisition and Doubles Share Repurchase Program to $2 Billion
    édité le 08/09/2022 - Plus de news de "EQT" - Voir la fiche entreprise de "EQT"

EQT Announces Strategic Bolt-On Acquisition and Doubles Share Repurchase Program to $2 Billion
EQT Corporation announced that it has entered into a purchase agreement with THQ Appalachia I, LLC ("Tug Hill") and THQ-XcL Holdings I, LLC ("XcL Midstream") whereby to which EQT has agreed to acquire Tug Hill's upstream assets and XcL Midstream's gathering and processing assets, for total consideration of $5.2 billion. Tug Hill and XcL Midstream are backed by equity commitments from funds managed by Quantum Energy Partners. The transaction is expected to close in the fourth quarter of 2022, with an effective date of July 1, 2022. Subject to the transaction close and EQT's regular board approval process, Wil VanLoh, Founder and CEO of Quantum Energy Partners, will join EQT's board of directors.

Transaction Highlights:

Strategic bolt-on adds ~800 MMcfe/d in the core of southwest Appalachia
   - ~90,000 core net acres offsetting EQT's existing core leasehold in West Virginia, 96% operated working interest, 83% net revenue interest
   - ~300 remaining net risked locations, which compete favorably with EQT's adjacent assets and provide additional wet gas production optionality
   - 11 years of inventory at maintenance capital levels
High-margin assets expected to generate free cash flow(1) ("FCF") at average natural gas prices above ~$1.35 per MMBtu over the next 5 years

Integrated midstream facilities provide superior economics and margin capture
   - 95-miles of owned and operated midstream gathering systems connected to every major long-haul interstate pipeline in southwest Appalachia
   - 1.0 Bcfe/d rich gas trunkline and 3.5 Bcfe/d lean gas trunkline with 600 MMcf/d of compression capacity, 225 MMcf/d Clearfork processing plant, and 20 MBbls/d of condensate stabilization
   - Midstream capital requirements set to decline materially, driving an expected ~4x increase in midstream FCF(1) generation over the next two years

Assets acquired at attractive valuation with immediate accretion
   - Acquiring combined upstream and midstream assets at 2.7x next-twelve-month ("NTM") EBITDA (1), 27% NTM FCF yield(1)
   - Upstream-only valuation of 2.3x NTM EBITDA(1), 33% NTM FCF yield(1)
   - Purchase price implies long-term natural gas price of <$3.00 per MMBtu or a ~40% discount to current long-term strip
5-10% average accretion to FCF per share(1) expected over the next five years
   - Conservatively assumed no synergies; potential for $80+ million per annum

Leverage-neutral transaction, maintains Investment Grade balance sheet metrics
   - Pro forma YE23 net leverage(1) of ~0.0x
   - Maintaining long-term leverage(1) target of 1.0-1.5x at $2.75 gas

Transaction further improves the durability of EQT's free cash flow generation
   - Integrated cost structure and liquids yield drive average pro forma FCF(1) breakeven price down ~$0.15 per MMBtu through 2027
   - Pro forma 2023 FCF(1) expected to exceed $6.0 billion, with long-term annual FCF(1) expected to average $5.0+ billion at recent strip
   - Value enhancing deal triggers material increase in shareholder returns; doubling share repurchase authorization to $2.0 billion and raising year-end 2023 debt reduction target to $4.0 billion

President and CEO Toby Z. Rice stated, "The acquisition of Tug Hill and XcL Midstream checks all the boxes of our guiding principles around M&A, including accretion on free cash flow per share, NAV per share, lowering our cost structure and reducing business risk, while maintaining an investment grade balance sheet. The valuation metrics are compelling and accretion from the deal should lower our NYMEX free cash flow(1) breakeven price by approximately $0.15 per MMBtu, which gives us greater free cash flow durability through the cycle. As a result of even more confidence in the sustainability of our business, we are enhancing our shareholder returns framework by doubling our share repurchase authorization to $2.0 billion and increasing our year-end 2023 debt reduction goal from $2.5 billion to $4.0 billion."

Wil VanLoh, Founder and CEO of Quantum Energy Partners, said, "We are extremely pleased to have entered into this transaction and, in doing so, look forward to becoming a core shareholder in EQT and working closely with the EQT management team and board to enhance the long-term value of the company. We believe the company is in a uniquely strong position as the largest producer of natural gas in the country, with a differentiated track record of operational excellence, a deep core inventory base and a peer-leading commitment to ESG. The Tug Hill and XcL Midstream assets are complementary to EQT's existing footprint, and we believe the company is now positioned to create even more value for its shareholders through this highly strategic combination. I've admired Toby's leadership and vision since assuming the role of CEO and I'm excited about the opportunity to join EQT's board of directors upon transaction close. I am also incredibly thankful to have had the opportunity to partner with the Tug Hill and XcL teams over the past 8 years. They are a values-driven, creative and entrepreneurial group of professionals that have been great partners and close friends."

Michael Radler, CEO of Tug Hill and XcL Midstream said, "I am very proud of the Tug Hill and XcL Midstream teams and the amazing job they have done in building premier upstream and midstream companies in the heart of southwest Appalachia. Quantum has been a great partner and stood beside us as we built these companies over the last decade. People are what make companies great, and EQT, Tug Hill, XcL Midstream and Quantum have great people with shared values. We have long admired EQT and believe they are our natural acquiror given the synergies between the businesses. Since stepping into the CEO role, Toby has systematically changed EQT, internally and externally, into a world class natural gas producer that is focused on great culture, sound economic decision making and maximizing shareholder value. I admire his ability to execute on the plan he has outlined, and I believe in his future goals. EQT is the face of the new energy paradigm. His vision around U.S. LNG is something we believe in and because of our significant ownership position, are excited to be a part of that vision."

(1) A non-GAAP financial measure. See the Non-GAAP Disclosures section of this news release for the definition of, and other important information regarding, this non-GAAP financial measure.

About EQT Corporation

EQT Corporation (NYSE: 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. We are dedicated to responsibly developing our world-class asset base and being the operator of choice for our stakeholders. By leveraging a culture that prioritizes operational efficiency, technology and sustainability, we seek to continuously improve the way we produce environmentally responsible, reliable and low-cost energy. We have a longstanding commitment to the safety of our employees, contractors, and communities, and to the reduction of our overall environmental footprint. Our values are evident in the way we operate and in how we interact each day – trust, teamwork, heart, and evolution are at the center of all we do.

Origine : Communiqué EQT

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