Featured Company News - EQT Announces Rice Energy Acquisition; Set to Establish Leading Natural Gas Company in the U.S.
LONDON, UK / ACCESSWIRE / June 21, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for EQT Corp. (NYSE: EQT) and Rice Energy Inc. (NYSE: RICE), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=EQT. Both companies announced on JuZne 19, 2017, that they have entered into a definitive merger agreement, pursuant to which EQT would acquire all the outstanding shares of Rice's common stock for about $6.7 billion. The purchase price is structured in the form of 0.37 EQT's common stock and $5.30 per share of Rice's common stock. EQT will additionally assume or refinance about $1.5 billion of net debt and preferred equity. For immediate access to our complimentary reports, including today's coverage, register for free now at:
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Details of the Transaction
This agreement between the two shale gas Companies is viewed as a step towards the creation of an energy giant in the Marcellus and Utica shale formations. Rice Energy has built an outstanding presence in the Appalachian basin with an acreage portfolio, largely complementary to the Company's existing acreage, hence delivering exceptional synergies and making the transaction accretive in the first year, according to EQT Corp.
EQT expects a 50% increase in average lateral lengths for future wells located in Greene and Washington Counties in Pennsylvania. The land synergies for further development of future wells complements the infrastructure footprint of EQT Midstream Partners, L.P. (NYSE: EQM), where the Companies expect growth opportunities through drop-downs and additional organic projects.
EQT, which is already a leader in production in Appalachian Basin, expects this acquisition to establish itself as the leading natural gas producer in the United States. The Company plans to invest about $1.3 billion for well development in 2017 and will drill about 207 wells in 2017, including 119 Marcellus wells, and 81 Upper Devonian wells, and 7 Utica wells. The Company has additionally secured drilling rights to about 3.6 million acres of land across the Appalachian Basin and other basins, which also includes properties in Pennsylvania, West Virginia, Kentucky, Texas, Ohio, and Virginia.
Highlights of the Acquisition
EQT will expand its Marcellus footprint to 670,000 acres post the completion of the transaction, where it will receive 187,000 net acres from the acquisition. The Company will receive 64,000 net acres in the Upper Devonian region, expanding its footprint in the region to about 149,000 net acres. The Company will also acquire Rice's midstream assets, including a 92% interest in Rice Midstream GP Holdings, L.P., which holds 100% of the general partner incentive distribution rights and 28% of the limited partner interests in Rice Midstream Partners L.P. (NYSE: RMP).
The retained midstream assets the Company intends to sell to EQM in the near future through drop-down transactions are expected to generate about $130 million in EBITDA in 2018. The transaction is expected to close in the Q4 FY17 and is subject to customary closing conditions.
EQT Growth Prospects
Prior to the Rice acquisition, on February 09, 2017, EQT won a bankrupt auction through its subsidiary EQT Production Company to acquire 53,400 core net Marcellus acres, including drilling rights on 44,100 net acres in the Utica and current natural gas production of about 80 Mmcfe per day, from Stone Energy Corp. for $527 million. The acquired assets included 174 Marcellus wells, of which 123 wells were developed and 51 were under development.
On March 01, 2017, when Steven Schlotterbeck took hold of the Company as a CEO, the Company was expected to grow through operational excellence in Marcellus and Utica shale regions. However, the Company has stepped on the path to initiate growth through inorganic expansion and these two agreements are a testimony of the definitive growth strategy.
Last Close Stock Review
At the close of trading session on Tuesday, June 20, 2017, EQT Corp.'s stock price slipped 2.04% to end the day at $52.42. A total volume of 10.57 million shares were exchanged during the session, which was above the 3-month average volume of 2.53 million shares. The Company's shares have a dividend yield of 0.23%. At Tuesday's closing price, the stock's net capitalization stands at $9.08 billion.
At the closing bell, on Tuesday, June 20, 2017, Rice Energy's stock fell 1.79%, ending the trading session at $24.13. A total volume of 27.73 million shares have exchanged hands, which was higher than the 3-month average volume of 4.83 million shares. The Company's stock price rallied 15.45% in the last three months, 17.42% in the past six months, and 7.34% in the previous twelve months. Moreover, the stock surged 13.02% since the start of the year. The stock currently has a market cap of $4.96 billion.
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