EQT Corp., based in Pittsburgh, will acquire the upstream assets of THQ Appalachia I, also known as Tug Hill, and the gathering and processing assets of THQ-XcL Holdings I, also known as XcL Midstream.
Both of these assets were acquired from private equity firm Quantum Energy Partners. As part of the deal, Wil VanLoh, founder and CEO of Quantum Energy Partners, will join EQT’s board of directors. The total cost of the transactions, expected to close in the fourth quarter, is $5.2 billion.
“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,” EQT President and CEO Toby Rice said.
In light of the deal, Rice said the company is doubling its share repurchase authorization to $2 billion and increasing its year-end 2023 debt reduction goal from $2.5 billion to $4 billion.
“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,” VanLoh said.
The deal adds 800 MMcfe/d in the core of southwest Appalachia in West Virginia on 90,000 core net acres.
“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,” Michael Radler, CEO of Tug Hill and XcL Midstream, said.
The total purchase price of $5.2 billion consists of $2.6 billion in cash and $2.6 billion in EQT common stock.
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.