US-based natural gas producer EQT has entered into an agreement to acquire Rice Energy for about $6.7bn.
The transaction is expected to strengthen EQTs position as a major natural gas producer in the Appalachian Basin.
Rice Energy is an independent natural gas and oil company focused on exploration and development of natural gas and oil assets in the Appalachian Basin.
EQT expects the acquired acreage to result in 50% increase in average lateral lengths for future wells located in Greene and Washington Counties in Pennsylvania.
EQT`s president and chief executive officer Steve Schlotterbeck said: This transaction brings together two of the top Marcellus and Utica producers to form a natural gas operating position that will be unmatched in the industry.
Rice has built an outstanding company with an acreage footprint that is largely contiguous to our existing acreage, which will provide substantial synergies and make this transaction significantly accretive in the first year.
Besides, the acquisition is expected to complement the infrastructure footprint of EQT Midstream Partners.
The acquisition also cover Rices midstream assets, including a 92% stake in Rice Midstream GP Holdings, which holds 100% of the general partner incentive distribution rights and 28% of the limited partner interests in Rice Midstream Partners, and the retained midstream assets currently held at Rice.
Schlotterbeck added: We will now shift our focus from acquisitions to integration as we work to drive higher capital efficiency through longer laterals; reduce per unit operating costs through operational and G&A synergies; improve our sales portfolio by expanding access to premium markets; and deliver increased value to our shareholders.
The transaction is expected to be completed in the fourth quarter of 2017, subject to customary closing conditions.
In May 2016, EQT signed an agreement to acquire assets in the Marcellus Shale formation in West Virginia, US, from Norwegian oil and gas producer Statoil for $407m in cash.
Under the terms of the deal, EQT agreed to acquire 62,500 net acres, which have an estimated resource potential of 9.2 trillion cubic feet (Tcf), and current natural gas production of 50 millions of cubic feet equivalent (MMcfe) per day.
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