In the continuing consolidation of LNG sourcing and processing, Pittsburgh-based EQT Corporation announced Tuesday the $5.2 billion acquisition of Appalachian upstream and midstream assets held by Tug Hill and XcL Midstream, both backed by Houston’s Quantum Energy Partners.
EQT president and CEO Toby Z. Rice said the metrics of the acquisition are robust enough to allow the company to lower its NYMEX free cash flow price by $0.15 per MMBtu, creating enough new cash flow to impact the company’s ongoing balance sheet makeover.
“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,” Rice said. The deal is scheduled to close during Q4 of 2022.
EQT was advised on the transaction by a Kirkland & Ellis team led from New York by David Feirstein and from Houston by Cyril Jones . The mostly Houston-based Kirkland team included M&A partners Jennifer Gasser, Anthony Speier, Rahul Vashi and Lindsey Jaquillard and associates Isaac Bate and Alexandra Gallogly, with assistance from capital markets partners Matt Pacey and Lanchi Huynh and associate Logan Weissler, and debt finance partners Rachael Lichman and Chad Davis and associate Brittany Taylor.
Akin Gump also advised Tug Hill led by corporate partner Wes Williams in Dallas and counsel Eduardo Canales in Houston. The Akin Gump team also included corporate partner Cole Bredthauer, counsel Frankie Shulkin and associate Dominic Riella, tax partner Julia Pashin, and investment management counsel Marc Lombardi, all located in Dallas and Fort Worth.
RBC Capital Markets served as financial advisor to EQT. J.P. Morgan Securities and Wells Fargo Securities served as financial advisors to Tug Hill and XcL Midstream.
The $5.2 billion price tag includes $2.6 billion in cash and an estimated $2.6 billion in EQT common stock. Royal Bank of Canada, Mizuho Bank, Ltd. and PNC Bank, National Association, have jointly provided $2.5 billion of committed financing in connection with the transaction and EQT has access to $2.2 billion of liquidity under its unsecured credit facility. And as a result of the transaction Wil VanLoh, founder of Quantum Energy Partners, will be joining the board of EQT.
The assets themselves are located in the Appalachian region and fall within EQT’s footprint in the Marcellus and Utica Shales in the Appalachian Basin.