EQT Corporation has closed the acquisition of THQ Appalachia I Midco LLC (Tug Hill) and THQ-XcL Holdings I Midco LLC (XcL Midstream) for total consideration of approximately $2.4 billion in cash and 49.6 million shares of common stock. ‘EQT, after the purchase price. adjustments
Tug Hill’s upstream assets currently produce approximately 800 million cubic feet of gas equivalent per day at a 20 percent liquids yield. XcL Midstream’s gathering and processing assets add to 145 miles of owned and operated midstream gathering systems that connect to all long-haul interstate pipelines in the southwestern Appalachians, EQT said in a news release Tuesday.
According to the statement, EQT funded the cash portion of the consideration with $1.25 billion in term loans, $1 billion in cash on hand and a $150 million cash deposit previously held in escrow.
“We are thrilled to complete this strategic transaction and welcome the Tug Hill and XcL Midstream teams to EQT,” said EQT President and CEO Toby Rice. “These assets have lower breakeven prices in Appalachia and should reduce our free pro forma NYMEX cash flow breakeven price by approximately $0.15 per MMBtu [million British thermal unit], providing greater resilience to our business moving forward. We also see the potential for more than $80 million annually in synergies, which could generate additional reductions in our corporate cost structure over time.”
In a separate earnings release, EQT reported a net loss of $67 million for the second quarter, compared with net income of $894 million in the year-ago period. The company’s adjusted EBITDA was $360 million in the quarter, down from $943 million in the same quarter of 2022.
EQT reported second-quarter production of 471 billion cubic feet of gas equivalent and capital expenditures, excluding non-controlling interests, of $470 million, which were in line with the company’s midpoint of the respective guidance ranges, according to the statement.
EQT said it set a new world record of 18,200 feet drilled in 48 hours, while a benchmark study showed the company is drilling 68 percent faster than its peer average, with its efficiency of completion increasing by 20 percent year on year. The company said it completed a lateral of nearly four miles in the second quarter, which is “one of the longest in U.S. shale drilling history.”
“Our drilling and completion teams performed well during the quarter, setting multiple domestic and global records. These achievements underscore EQT’s best-in-class execution capabilities and our continued drive to push the envelope when it comes to achieve maximum performance,” Rice said. .
“On the return on equity front, we took another important step toward achieving our balance sheet goals by retiring $800 million of incremental debt during the quarter,” Rice added. “We have now retired a total of $1.9 billion of debt since we initiated our return to shareholders framework at the end of 2021, which has driven a progressive improvement in our leverage profile.
“We also signed an HOA [heads of agreement] for 1 million tonnes per annum of Gulf Coast tolling capacity, marking the initial implementation of our risk-adjusted LNG strategy.
“Our scale, peer-leading depth of inventory and environmental attributes uniquely position EQT to facilitate energy security and emissions reduction goals both domestically and abroad.”
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