PITTSBURGH, April 15,
2024 /PRNewswire/ -- EQT Corporation (NYSE: EQT)
("EQT") announced it has entered into an agreement with Equinor
USA Onshore Properties Inc. and
their affiliates to sell an undivided 40% interest in its
non-operated natural gas assets in Northeast Pennsylvania, representing
approximately 225 MMcf/d of forecasted 2025 net production.
Consideration for the transaction is comprised of $500 million of cash and upstream and midstream
assets as described below. Based on recent strip pricing, EQT
forecasts aggregate 2025 free cash flow(1) of
approximately $75 million from the
non-cash consideration.
The assets EQT is receiving in the transaction consist of:
- ~26,000 net acres in Monroe County,
Ohio with 2025E net production of ~135 MMcfe/d directly
offsetting EQT-operated acreage
- ~10,000 net acres in Lycoming County,
Pennsylvania with 2025E net production of ~15 MMcfe/d in
existing EQT-operated assets
- The remaining 16.25% ownership in EQT-operated gathering
systems servicing core operated acreage in Lycoming County, Pennsylvania
- A gas buy-back agreement whereby Equinor will purchase gas from
EQT at a premium to in-basin pricing through the first quarter of
2028
EQT President and CEO Toby Z.
Rice stated, "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% of our non-operated assets,
while retaining gas price upside. 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."
The transaction is subject to customary closing adjustments,
required regulatory approvals and clearances, and is expected to
close in late second quarter of 2024. EQT expects no cash tax
leakage associated with the transaction.
Advisors
Jefferies LLC acted as lead financial advisor
and TD Securities acted as a financial advisor to EQT. Kirkland
& Ellis LLP is serving as EQT's legal counsel on the
transaction.
(1)
|
A non-GAAP
financial measure. See the Non-GAAP Disclosures section of this
news release for the definition of, and other important information
regarding, this non-GAAP financial measure.
|
Investor Contact
Cameron
Horwitz
Managing Director, Investor Relations & Strategy
412.395.2555
Cameron.Horwitz@eqt.com
About EQT Corporation
EQT Corporation is a leading
independent natural gas production company with operations focused
in the Appalachian Basin. We are dedicated to responsibly
developing our world-class asset base and being the operator of
choice for our stakeholders. By leveraging a culture that
prioritizes operational efficiency, technology and sustainability,
we seek to continuously improve the way we produce environmentally
responsible, reliable and low-cost energy. We have a longstanding
commitment to the safety of our employees, contractors, and
communities, and to the reduction of our overall environmental
footprint. Our values are evident in the way we operate and in how
we interact each day – trust, teamwork, heart, and evolution are at
the center of all we do. To learn more, visit eqt.com.
Cautionary Statements
This news release contains
certain forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended, and Section
27A of the Securities Act of 1933, as amended. Statements that do
not relate strictly to historical or current facts are
forward-looking. Without limiting the generality of the foregoing,
forward-looking statements contained in this news release
specifically include the expectations of plans, strategies,
objectives and operational performance of EQT Corporation and its
subsidiaries (collectively, "EQT"), including statements regarding
the proposed transaction between EQT and Equinor, the expected
closing of the proposed transaction and the timing thereof; the
consideration to be received by EQT in the proposed transaction;
the projected volumes and free cash flow to be generated from the
assets to be acquired by EQT in the proposed transaction; projected
tax impacts from the proposed transaction; potential future sales
of EQT's remaining non-operated assets in Northeast Pennsylvania, if at all; and the
anticipated future performance pertaining to the assets to be
acquired by EQT in the proposed transaction.
The forward-looking statements included in this news release
involve risks and uncertainties that could cause actual results to
differ materially from projected results. Accordingly, investors
should not place undue reliance on forward-looking statements as a
prediction of actual results. EQT has based these forward-looking
statements on current expectations and assumptions about future
events, taking into account all information currently known by EQT.
While EQT considers these expectations and assumptions to be
reasonable, they are inherently subject to significant business,
economic, competitive, regulatory and other risks and
uncertainties, many of which are difficult to predict and beyond
EQT's control. These risks and uncertainties include, but are not
limited to, volatility of commodity prices; the costs and results
of drilling and operations; uncertainties about estimates of
reserves, identification of drilling locations and the ability to
add proved reserves in the future; the assumptions underlying
production forecasts; the quality of technical data; EQT's ability
to appropriately allocate capital and other resources among its
strategic opportunities; access to and cost of capital, including
as a result of rising interest rates, inflation and other economic
uncertainties; EQT's hedging and other financial contracts;
inherent hazards and risks normally incidental to drilling for,
producing, transporting and storing natural gas, NGLs and oil;
cybersecurity risks and acts of sabotage; availability and cost of
drilling rigs, completion services, equipment, supplies, personnel,
oilfield services and sand and water required to execute EQT's
exploration and development plans, including as a result of supply
chain and inflationary pressures; risks associated with operating
primarily in the Appalachian Basin and obtaining a substantial
amount of EQT's midstream services from Equitrans Midstream
Corporation; the ability to obtain environmental and other permits
and the timing thereof; government regulation or action, including
regulations pertaining to methane and other greenhouse gas
emissions; negative public perception of the fossil fuels industry;
increased consumer demand for alternatives to natural gas;
environmental and weather risks, including the possible impacts of
climate change; and disruptions to EQT's business due to
acquisitions, divestitures and other strategic transactions,
including the pending transaction with Equinor and EQT's pending
transaction with Equitrans Midstream Corporation. These and other
risks are described under the "Risk Factors" section and elsewhere
in EQT's Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC and in other
documents EQT files from time to time with the SEC.
Any forward-looking statement speaks only as of the date on
which such statement is made, and, except as required by law, EQT
does not intend to correct or update any forward-looking statement,
whether as a result of new information, future events or
otherwise.
Non-GAAP Disclosures
Adjusted Operating Cash Flow,
Free Cash Flow, Free Cash Flow Yield and Free Cash Flow Per
Share
Adjusted operating cash flow is defined as net cash provided by
operating activities less changes in other assets and liabilities.
Free cash flow is defined as adjusted operating cash flow less
accrual-based capital expenditures, excluding capital expenditures
attributable to noncontrolling interests. Free cash flow yield is
defined as free cash flow divided by market capitalization. Free
cash flow per share is defined as free cash flow divided by EQT's
weighted average common shares outstanding. Adjusted operating cash
flow, free cash flow, free cash flow yield and free cash flow per
share are non-GAAP supplemental financial measures used by EQT's
management to assess liquidity, including EQT's ability to generate
cash flow in excess of its capital requirements and return cash to
shareholders. EQT's management believes that these measures provide
useful information to external users of EQT's consolidated
financial statements, such as industry analysts, lenders and
ratings agencies. Adjusted operating cash flow, free cash flow,
free cash flow yield and free cash flow per share should not be
considered as alternatives to net cash provided by operating
activities or any other measure of liquidity presented in
accordance with GAAP.
EQT has not provided projected net cash provided by operating
activities or a reconciliation of projected adjusted operating cash
flow, free cash flow, free cash flow yield or free cash flow per
share to projected net cash provided by operating activities, the
most comparable financial measure calculated in accordance with
GAAP. EQT is unable to project net cash provided by operating
activities for any future period because this metric includes the
impact of changes in operating assets and liabilities related to
the timing of cash receipts and disbursements that may not relate
to the period in which the operating activities occurred. EQT is
unable to project these timing differences with any reasonable
degree of accuracy without unreasonable efforts such as predicting
the timing of its payments and its customers' payments, with
accuracy to a specific day, months in advance. Furthermore, EQT
does not provide guidance with respect to its average realized
price, among other items, that impact reconciling items between net
cash provided by operating activities and adjusted operating cash
flow, free cash flow, free cash flow yield and free cash flow per
share. Natural gas prices are volatile and out of EQT's control,
and the timing of transactions and the income tax effects of future
transactions and other items are difficult to accurately predict.
Therefore, EQT is unable to provide projected net cash provided by
operating activities, or the related reconciliation of projected
adjusted operating cash flow, free cash flow, free cash flow yield
or free cash flow per share to projected net cash provided by
operating activities, without unreasonable effort.
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SOURCE EQT Corporation (EQT-IR)