June 28, 2018 - 6:33 PM EDT
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Investor Group Led by BSFI Western E&P, Inc. Issues an Open Letter to the Board of Directors at EQT Corporation


Expresses surprise that Board continues to ignore the Group’s fully-financed $750 million bid for EQT’s Southern Appalachia Assets

Board seems to favor a much lower, highly conditional $575 million bid by another bidder who requires complex financing through capital raises and shareholder approval

Investor Group also offered passive $1 billion equity investment in EQT

An investor group led by BSFI Western E&P, Inc., which includes deep-pocketed strategic partners and investors, today issued an open letter to the Board of Directors of EQT Corporation.

In its letter, the investor group expresses its surprise and disappointment that the EQT Board has ignored its $750 million bid for EQT’s Southern Appalachia Assets in favor of a substantially lower bid of $575 million by Diversified Gas & Oil PLC. The Investor Group’s offer is fully- financed in contrast to Diversified’s bid, which requires financing through capital raises, potential asset sales and a new expanded debt facility, as well as shareholder approval.

The letter further discloses that the investor group also offered EQT a passive equity investment of $1 billion in EQT shares, to which astonishingly the EQT Board has not yet responded. In connection with such investment, the investor group stated that it would not seek any special governance or other rights and that there is no intention to create a control position in EQT.

Following is the text of the letter in its entirety:


June 28th, 2018

The Board of Directors of EQT Corporation
EQT Plaza
625 Liberty Avenue, Suite 1700
Pittsburgh, PA, 15222 USA

To the Members of the EQT Board of Directors:

We are writing to you on behalf of the investor group led by BSFI Western E&P, Inc. with respect to our $750 million offer that we previously submitted for EQT’s Southern Appalachia assets on June 5, 2018, and our subsequent communications regarding our bid sent to Mr. David Porges, Chairman of the EQT Board, on June 13, 2018 and June 19, 2018.

We are surprised and disappointed that EQT has failed to engage with us on our clearly superior bid. We were even more surprised and astonished to see yesterday’s press release and securities filings of Diversified Gas & Oil PLC (AIM: DGOC), in which Diversified disclosed that it has “signed a non-binding letter of intent” to acquire the assets and is “pleased to confirm that it has now finalised the terms of the agreement to acquire the [assets] and anticipates that this agreement will be signed shortly.” Diversified’s disclosed purchase price of $575 million is substantially lower than our bid of $750 million. It is difficult to understand why any board would choose to ignore a bid that is more than 30% higher.

Moreover, unlike Diversified, our bid has fully committed capital and therefore does not include any financing contingency. We have obtained all required internal approvals to consummate the transaction.

By contrast, as per its own disclosures, Diversified would require a new debt facility of $1.0 billion and an issuance of new shares to raise up to $225 million in order to finance its acquisition of the assets. Moreover, again as per its own disclosures, Diversified would require shareholder approval to close the acquisition of the assets.

We have already committed $35 million to drill an additional 30 wells during the first six months post-acquisition and would pursue an aggressive, well-capitalized drilling and expansion program over the next five years. Moreover, we offered to keep all of the EQT employees associated with the assets post-closing and to do so at their current level of salary, bonus and benefits.

We also offered to acquire a representation and warranty insurance policy at our own cost. The use of a R&W policy in connection with the transaction would have significant advantages to EQT, including the following:

  • Allowing for a “clean” exit of the assets by reducing risk of significant post-closing indemnity payments from future representations and warranties claims.
  • Eliminating the need for an escrow fund for future indemnifications.
  • Providing financial certainty post-closing.
  • Locking in proceeds from the transaction for distribution to EQT shareholders or use by EQT in the operations of its business.

Lastly, as a measure of our strong conviction in EQT and our bid, we offered an investment of up to $1 billion in EQT through a PIPE or other similar structure. The investment would only further strengthen EQT’s balance sheet and would allow EQT to leverage the vast resources of our investor group. In connection with this investment, our investor group would not seek any special governance or other rights and there is no intention to create a control position in EQT. On the contrary, our investor group would expect the investment to be passive in nature. This proposal is independent from our bid for EQT’s Southern Appalachia assets, and neither proposal is contingent on the other.

We fail to understand how a public company board can possibly discharge its fiduciary duties by ignoring our proposals. We believe that the EQT Board owes it to its shareholders and employees to seriously engage with us. We look forward to discussing our proposals with you. Our investor group has engaged Sidley Austin LLP to assist us in this process and they stand ready to engage with your advisors.


Mr. Doug Hyden
Operating Partner
BFSI Western E&P, Inc.

About BSFI Western E&P, Inc.

BFSI is a Louisiana-based Oil and Gas Operator headed by Doug Hyden. Mr. Hyden is the former C.O.O of The Kinzer Companies, a Prestonburg, Kentucky-based natural gas production company. During Mr. Hyden’s tenure, Kinzer expanded its production from 909 to over 2,600 producing wells including nearly 300 wells that were jointly operated with EQT. Mr. Hyden was in charge of overseeing all land administration and business development functions, which included, leasing, mineral acquisitions, right of way transactions, title, title review, permitting, engineering and managing internal and external brokers. Mr. Hyden cultivated relationships with individuals and business entities in the United States, and internationally, to lease and acquire minerals throughout Kentucky, West Virginia and Tennessee. Mr. Hyden planned and developed an annual USD$30-$60 million dollar annual exploration program to achieve the company’s targeted production growth.

Doug Hyden, 606-548-0634
[email protected]
Gagnier Communications
Dan Gagnier, 646-569-5897
[email protected]

Source: Business Wire (June 28, 2018 - 6:33 PM EDT)

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