Yesterday EQT, now the largest natural gas producing company in the United States following its acquisition of Rice Energy, released 2017 numbers. On an analyst call to discuss the number, CEO Steve Schlotterbeck turned the conversation in the direction of “sum of the parts”–which turned out to be the really big news. What in the world is “sum of the parts?” In October 2017, prior to EQT consummating its deal to buy Rice, Steve Schlotterbeck said following the merger EQT would study a plan to split the newly consolidated company into two pieces–upstream/drilling and midstream/pipelines (see EQT CEO Signals Company Likely to Split in Two After Rice Merger). EQT is considering a split under pressure from a corporate raider (aka “activist investor”). You know what we think of corporate raiders. Scum of the earth. Anywho, in high finance, the theory is that if you split a company in two different lines of business into pieces, with each piece focusing on a different market (drilling vs. pipelines in the case of EQT), the two companies would be worth far more to investors as standalone companies than they are joined together. In other words, the “sum of the parts” is worth more than the whole. EQT honored its word, hiring two new board members following the Rice merger. Their role is specifically to help with reviewing and crafting a plan to split the company. The outcome of the review (and the plan to split the company in two) was due out by the end of March. However, on yesterday’s analyst phone call, Schlotterbeck said the review and a plan will be released by “the end of February”–in less than two weeks. Frankly, there’s no doubt the review will recommend a split, judging by Schlotterbeck’s comments (see below). Schlotterbeck said yesterday, “[W]e intend to implement the plan on an accelerated basis.” Welcome to splitsville…
