Mergers & Acquisitions

EQT to Acquire Rice Energy

The $6.7 billion transaction would make EQT the largest producer of natural gas in the U.S.
William SprouseJune 19, 2017
EQT to Acquire Rice Energy

Oil and gas company EQT has announced it has reached a deal to buy Rice Energy for $6.7 billion. The combined firm would own 1.5 million acres spanning the Marcellus and Utica shale formations, and the transaction would make EQT the largest producer of natural gas in the country, according to a report from the Pittsburgh Post-Gazette. The two companies are based in southwest Pennsylvania.

“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,” EQT CEO Steve Schlotterbeck said in a statement.

The deal values Rice Energy’s shares at a 37% premium to Friday’s closing price. The stock had lost 7.8% year-to-date through Friday. EQT also said it will assume or refinance about $1.5 billion of debt and preferred equity.

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If the deal is approved, Rice shareholders will get $5.30 and one-third of a share of EQT stock for each share of Rice they own. The boards of directors of both companies unanimously approved the transaction, and the deal is expected to close in the fourth quarter.

The deal will include Rice’s exploration and production assets as well as interest in several midstream master limited partnerships (MLPs), according to the Post-Gazette report.

EQT was founded in 1888 and is headquartered in Pittsburgh. Rice was founded in 2007 by three brothers who named their wells after superheroes. The MLPs operate natural gas gathering and compression assets and water pipelines.

News of the transaction sent Rice Energy stock soaring more than 25% on Monday. EQT’s shares had fallen 7.3% in early trading.

Featured image: Thinkstock