EQT Corp. announced Tuesday it has reached a deal to purchase Chevron’s upstream and midstream assets in Appalachia. The $735 million deal will make EQT, already the largest natural gas company in Pennsylvania, even bigger.
Chevron announced in December that it planned to divest its assets in this region, which include 335,000 acres of in the Marcellus shale and about 430,000 acres in the Utica shale in Pennsylvania, West Virginia and Ohio. Chevron now produces about 450,000 million cubic feet of gas equivalent (Mmcfe) per day of gas, 25 percent of that in gas liquids.
The company operates hundreds of wells, including 47 in Fayette County, 29 in Greene County and 11 in Washington County, according to the Pennsylvania Department of Environmental Protection’s gas mapping website. In addition EQT will get about 100 wells that are still being completed. Chevron came to Appalachia when it bought Atlas Energy for $4.3 billion in 2011.
The deal comes as many industry observers expect a period of consolidation in the industry, which has been battered by low gas prices and reduced demand due to the coronavirus.
EQT will also get an interest in Laurel Mountain Midstream, a gas gathering pipeline system operated by Williams, as well as two systems and associated infrastructure that handle fresh and produced water in Pennsylvania and West Virginia. Gathering lines are essential to get the gas from the wellhead to markets.
"This acquisition is a natural bolt-on extension of EQT's dominant position in the core of the southwest Marcellus and supplements our already impressive asset base.” President and CEO Toby Rice stated in a release.
“Our unique knowledge of these assets, coupled with our superior operating model, puts these assets in the right hands to maximize the embedded value," he continued.
The purchase, which is expected to be final late this year, will be partially funded with a 20 million share stock offering, as well as cash reserves and revolving credit. And it may not be the last transaction for EQT, as published reports recently surfaced that the company is trying to take over CNX Resources, a Southpointe-based gas driller that also operates in southwestern Pennsylvania.
Meanwhile, Chevron announced it just completed its acquisition of Noble Energy, enhancing its assets in the Permian Basin of Texas and adjacent areas and in the Eastern Mediterranean.