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4-Traders Homepage  >  Equities  >  Nyse  >  EQT Corporation    EQT

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EQT : Oil and gas producer EQT to buy Rice Energy in $6.7 billion deal

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06/19/2017 | 07:35pm CEST

U.S. oil and gas company EQT Corp (>> EQT Corporation) said on Monday it would buy Rice Energy (>> Rice Energy Inc) for $6.7 billion (5.24 billion pounds) in its biggest deal ever, as it looks to expand its natural gas business.

U.S. oil and gas company EQT Corp (>> EQT Corporation) said on Monday it would buy Rice Energy (>> Rice Energy Inc) for $6.7 billion (5.24 billion pounds) in its biggest deal ever, as it looks to expand its natural gas business.

Rice Energy's shares surged more than 24 percent to $24.47 in early trading, but below the $27.05 per share offered by EQT. EQT's shares were down 9.4 percent.

The deal comes at a time when U.S. energy firms are pumping in money to develop facilities in gas-rich states like Pennsylvania, West Virginia and Ohio as the country prepares to become the world's top natural gas exporter.

EQT said it would be able to drill longer horizontal wells in Pennsylvania after the deal as most of the acquired acreage is next to where EQT already drills or owns land.

"EQT is a decade behind in fracking technology used by industry leaders in Marcellus/Utica," said Dallas Salazar, CEO of energy consulting firm Atlas Consulting. "EQT needs a lot - and Rice offers a lot of what it needs."

EQT has been buying acreage in the Marcellus shale field - where gas is among the cheapest in the country. Most recently it picked up 53,400 acres in the field from Stone Energy Corp.

EQT said the acquisition would increase its 2017 average sales volume by 1.3 billion cubic feet equivalent per day (bcfe/d) and its core acres in the Marcellus field by 187,000 to 670,000.

The deal would also give the company access to Rice Energy's midstream assets, including a 92 percent interest in Rice Midstream GP Holdings. EQT will take on about $1.5 billion in debt.

Rice Energy shareholders will receive $5.30 per share in cash and 0.37 EQT shares for each share they hold, EQT said.

The offer translates to a price of $27.05 per Rice Energy share, representing a premium of 37.4 percent to the stock's Friday closing price, according to Reuters calculations.

Citigroup was EQT's financial adviser, while Wachtell, Lipton, Rosen & Katz were its legal advisers. Barclays Capital Inc was Rice Energy's financial adviser and Vinson & Elkins LLP its legal adviser.

(Reporting by Yashaswini Swamynathan and Arathy S Nair in Bengaluru; Editing by Sai Sachin Ravikumar and Saumyadeb Chakrabarty)

By Yashaswini Swamynathan and Arathy S Nair

Stocks treated in this article : EQT Corporation, Rice Energy Inc
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Financials ($)
Sales 2017 3 172 M
EBIT 2017 1 046 M
Net income 2017 324 M
Debt 2017 2 920 M
Yield 2017 0,21%
P/E ratio 2017 35,44
P/E ratio 2018 33,47
EV / Sales 2017 4,11x
EV / Sales 2018 3,49x
Capitalization 10 099 M
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