US: With $8.2Bn buy, EQT becomes America’s biggest Natural Gas producer

Natural gas company EQT confirmed today that it will acquire Rice Energy in a $6.7 billion cash and stock deal that will create powerhouse where growth in LNG exports could ease up more than driller in the Marcellus and Utica shale of southwestern Pennsylvania and northern West Virginia.

The deal vaults EQT past ExxonMobil and Chesapeake Energy to make it the nation’s biggest natural gas producer with more than 3 billion cubic feet per day of production — responsible for about 5% of America’s gas supply. Analyst Tim Rezvan at Mizuho called the deal “empire building” for EQT.

Pittsburgh-based EQT acquires about 400,000 acres and a couple thousand drilling locations in the deal. It also gets a lot of valuable capacity on gas pipelines, including a tripling of transport capacity out of the Northeast down to the Gulf Coast, where growth in LNG exports could east up more than 10% of U.S. gas supply within a few years. EQT will also assume $1.5 billion in Rice debt, bringing to total purchase price to $8.2 billion.

The deal brings a nice payday for private equity groups Riverstone, Quantum and Vantage, each of which holds a big slug of preferred stock in Rice. Earlier equity backing had been provided by Natural Gas Partners.

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