On Monday, Pittsburgh-based EQT Corporation announced it had entered into an agreement with Equinor USA Onshore Properties, Inc., over non-operated natural gas assets.
As part of the agreement, Equinor will sell 100 percent interest in and operatorship of its onshore asset in the Appalachian Basin, in exchange for 40 percent of EQT’s non-operated working interest in the Northern Marcellus Shale formation in PA. EQT forecasts the transaction, comprised of $500 million of cash and upstream and midstream assets, will leave it with aggregate 2025 free cash flow of approximately $75 million from the non-cash consideration.
Equinor will increase its average working interest in certain Chesapeake-operated Northern Marcellus gas units from 15.7 percent to 25.7 percent.
“With this transaction, we continue to high-grade the US portfolio and improve profitability by strengthening our gas position in the most robust part of the Appalachian Basin. These assets are well positioned to leverage anticipated positive developments in the US gas market. The proposed swap improves portfolio robustness with an expected reduction in well break-evens and upstream carbon intensity. This also means that we have now fully exited all operated positions onshore US,” Philippe Mathieu, executive vice president for Exploration and Production International at Equinor, said.
To cover pre-existing gas sales commitments, Equinor will purchase gas from EQT at a premium to in-basin pricing through the first quarter of 2028.
EQT will receive approximately 26,000 net acres in Monroe County, Ohio with an estimated production of 135 MMcfe/d; approximately 10,000 net acres of Lycoming County, PA with net production of about 15 MMcfe/d; and the remaining 16.25 percent ownership in EQT-operated gathering systems servicing core operated acreage in Lycoming County, PA.
“This transaction marks an extremely positive start to our divestiture program, bringing in over $1.1 billion of value, including synergies and development plan optimization, for 40 percent of our non-operated assets, while retaining gas price upside,” EQT President and CEO Toby Z. Rice said. “We plan to opportunistically divest the remaining portion of our non-operated assets in Northeast Pennsylvania and have tremendous confidence in being able to achieve our de-leveraging goals.”