EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US

Move over Exxon Mobil and Chesapeake Energy. There’s now (or soon will be, when the transaction is complete) a new #1 natural gas producer in the United States: EQT. In a deal you’ve no doubt heard about from multiple sources by now (because the news broke yesterday, just after MDN published for the day), EQT and Rice Energy announced that EQT will purchase Rice Energy, lock, stock and barrel, for $6.7 billion in cash and stock, and assume $1.5 billion in debt, for a total deal price of $8.2 billion. Along with 187,000 net acres in the PA Marcellus, and 65,000 net acres in the OH Utica Shale, EQT will get 1.3 billion cubic feet per day of Rice Energy natural gas production. When added to its own prodigious production (EQT was already one of the biggest and brightest shale companies), the combined output for the newly merged company will eclipse #2 Exxon and #3 Chesapeake Energy’s output to become the largest natural gas producing company in the country. Wow! Rice’s midstream (i.e. pipeline) assets are part of the deal. If you peg the midstream part of the deal at $1.8 billion, which some analysts say is the right number, and then calculate the per acre price of the deal, it works out to be around $9,900 per acre. Below we have the EQT/Rice announcement, the PowerPoint slide deck they used for a conference call held yesterday, and plenty of analysis about the deal–why it happened, and why now…

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