EQT Corp

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    Why Corp Raider Jana Won’t Succeed in Derailing EQT/Rice Deal

    One of our favorite oil and gas analysts, Richard Zeits, says it’s a long shot at best that the corporate raiders at Jana Partners will be able to scuttle EQT’s planned purchase of Rice Energy. In June, EQT announced a deal to buy out Rice Energy for $6.7 billion in cash and stock, and assume $1.5 billion in debt, for a total deal price of $8.2 billion (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). A few weeks later so-called “activist investor” (i.e. corporate raider) Jana Partners, in league with the Cohen family (Atlas Energy) started a proxy fight to block EQT’s takover/merger with Rice Energy (see Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal). Instead of buying Rice, Jana is demanding that EQT split itself into two companies–upstream (drilling) and midstream (pipelines). These kinds of machinations are far above our understanding when it comes to high finance. However, there is a guy who eats, sleeps and breathes this stuff–Richard Zeits of OIL ANALYTICS. In an analysis piece on the Seeking Alpha investors website, Zeits says, “Jana’s activism is unlikely to derail” the deal. Here’s his reasoning…
    Read More “Why Corp Raider Jana Won’t Succeed in Derailing EQT/Rice Deal”

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    EQT Update on Mon Valley Drilling – 7 Utica Wells Coming This Yr

    A couple of EQT representatives addressed the Monongahela Area Chamber of Commerce yesterday to update residents on EQT’s drilling plans in the Mon Valley region. The EQT reps said all of the wells drilled locally so far have been Marcellus wells. However, EQT plans to drill 7 Utica wells this year in the Mon Valley area. Here are some of the details on where EQT has been, and plans to, drill in the Mon Valley region during 2017…
    Read More “EQT Update on Mon Valley Drilling – 7 Utica Wells Coming This Yr”

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    Corp Raider Jana Sends Nastygram to EQT Demanding it Split in Two

    Earlier this week MDN told you the news that corporate raider Jana Partners, along with the Cohen family (of Atlas Energy fame), are colluding to try and stop the merger/sale of Rice Energy to EQT (see Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal). The two groups together now own nearly 6% of EQT’s stock. Jana is trying to get two people added to EQT’s board. Their demands? Abandon the buyout/merger of Rice Energy, and that EQT needs to split itself in two, right now, into upstream (drilling) and midstream (pipelines). Jana filed the required paperwork with the Securities and Exchange Commission on July 3rd. On July 5th, Jana’s founder and managing partner, Barry Rosenstein, sent a letter (i.e. nastygram) to EQT–his list of demands. It’s going to be a long summer for EQT…
    Read More “Corp Raider Jana Sends Nastygram to EQT Demanding it Split in Two”

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    Rice Midstream Investors Hope Deal with EQT Doesn’t Happen

    When EQT and Rice Energy announced a deal in June for EQT to buyout and merge in Rice to create the largest natgas-producing company in the U.S., it seemed like a match made in heaven (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). However, not everyone is in favor of the merger, including a corporate raider who know owns nearly 6% of EQT’s stock (see Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal). You can add another group–from the “inside”–that doesn’t want to see the merger happen either: investors in Rice Midstream. Rice Midstream is an MLP, or master limited partnership, a different structure from the usual stockholding corporation. In an MLP, investors hold “units” instead of shares, and those units are tax-advantaged. The bottom line is that Rice Midstream investors are, according to a Bloomberg Businessweek article, concerned that they will get the short end of the stick in a post-merger EQT world. Already the value of their units has fallen 20% since the announcement of the merger. It wouldn’t hurt Rice Midstream investors’ feelings at all if Jana (evil corporate raider) prevents the merger from happening. For Rice Midstream investors, the enemy of my enemy is my friend…
    Read More “Rice Midstream Investors Hope Deal with EQT Doesn’t Happen”

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    Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal

    So-called “activist investor” (i.e. corporate raider) Jana Partners, in league with the Cohen family (Atlas Energy) has started a proxy fight and is trying to block EQT’s takover/merger with Rice Energy. Jana is the same company that recently helped Amazon buy Whole Foods. In a filing with the Securities and Exchange Commission on Tuesday (embedded below), Jana disclosed the company has purchased ~5% of EQT’s stock and is launching an effort to block EQT’s proposed buyout of Rice Energy (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). As a quick reminder, here’s what corporate raiders (aka “activist investors”) do: They buy up enough stock in a company to control board decisions, getting several of their own people appointed to the board of directors. Typically corporate raiders will collude with another large stockholder or two to accomplish a board coup d’état. The corporate raider then forces the target company to sell off assets and layoff people. The resulting company is, they claim, “healthier” and more streamlined. The stock price bumps up, the raider sells its stock, pocketing a nice profit. And then moves on to the next target. Meanwhile, good people are standing in the unemployment line, in the wake of the raider’s “improvements.” There is nothing moral or righteous or just about the actions of corporate raiders. It is immoral, unjust and disgusting. In the words of Whole Foods CEO John Mackey, Jana are “greedy bastards.” That about sums it up. It’s distressing to see the Cohen clan collude in this kind of behavior. They should stick to their own knitting. Maybe if they had, their own company (Atlas Energy) wouldn’t have gone bankrupt (see Atlas Resource Partners Filing for Bankruptcy Tomorrow). Here’s the developing story of the effort to derail EQT’s deal with Rice Energy, and force EQT to break itself into pieces…
    Read More “Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal”

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    Will the Merged EQT/Rice Energy be Too Big for Investors?

    A week ago yesterday, EQT and Rice Energy announced some of the biggest news we’ve every reported: EQT is buying out and merging in Rice Energy, to create the largest natural gas producing company in the United States (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). The combined company will not only be the country’s largest shale gas producer, it will also jump to become the Marcellus/Utica region’s #1 producer/driller. Some analysts and investors are concerned about that. Since EQT/Rice is 100% focused on the Marcellus/Utica, does that put the company at risk? The market got a bit jittery following the announcement. Two days after the news EQT’s stock price tanked, down about $8/share. However, the stock price has since rebounded (see the chart below). Zacks Investment Research issued a research note last Friday analyzing the deal and what it may mean for investors…
    Read More “Will the Merged EQT/Rice Energy be Too Big for Investors?”

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    Mountain Valley Pipeline Final Enviro Impact Statement Due Today

    The Mountain Valley Pipeline (MVP) is a $3.5 billion, 303-mile pipeline that will run from Wetzel County, WV to the Transco Pipeline in Pittsylvania County, VA. The project, which filed an official application with the Federal Energy Regulatory Commission in October 2015, is being built by EQT, NextEra Energy and several other partners. The project has faced stiff opposition from landowners in both West Virginia and Virginia. Although the project is not yet fully approved by the Federal Energy Regulatory Commission (FERC), the project did get a favorable Draft Environmental Impact Statement from FERC last September (see FERC Gives WV to VA Mountain Valley Pipeline Provisional Thumbs Up). MVP had wanted a final Environmental Impact Statement by March 10th, but that didn’t happen. Instead, FERC delayed a final EIS until today, June 23rd. What happens after MVP gets a (presumably) favorable final EIS? Right now FERC doesn’t have a quorum of commissioners who can vote to allow construction to begin. However, the hope around Washington, DC is that the Senate will take a final vote on two new commissioners before the July 4th holiday. If that happens, FERC may well vote to allow MVP to begin at any time following a quorum…
    Read More “Mountain Valley Pipeline Final Enviro Impact Statement Due Today”

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    More Details on EQT/Rice Merger – Who Stays & Who Goes?

    On Monday EQT announced what is some of the biggest news MDN has covered in the past few years: EQT is buying Rice Energy (see EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US). The resulting merger, which will be completed later this year (if regulators and shareholders approve), will result in the country’s largest natural gas-producing company, eclipsing Exxon Mobil and Chesapeake Energy. Yesterday we brought you the initial details of the deal, along with some early analysis and reaction by analysts. Today we dig deeper. Rice Energy filed a Form 8-K with the Securities and Exchange Commission outlining the deal and its components–a 171-page document! No, we haven’t read the whole thing. However, the Pittsburgh Business Times apparently has, and they’ve come up with “seven things you should know” about the deal. One of the things the PBT found in the Form 8-K are details about non-compete clauses for Rice Energy’s top management. What it indicates to us is that the Rice boys and a few others at the top are getting golden parachutes and will leave the company when it merges with EQT…
    Read More “More Details on EQT/Rice Merger – Who Stays & Who Goes?”

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    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…
    Read More “EQT Buys Rice Energy in $8.2B Deal, Becomes #1 Gas Producer in US”

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    Top 10 Natural Gas Producers in the U.S., Post-EQT/Rice Merger

    As we were reading about yesterday’s big news of EQT buying Rice Energy, we came across a couple of lists (same list, different sources) listing the top 10 natural gas-producing companies in the United States. The list was reworked to show that the combination of EQT and Rice will create the #1 largest natural gas-producing company in the country. An astonishing feat. But what caught our eye in looking over the “top 10” list was just how many of the companies in that list have operations in the Marcellus/Utica. At one time or another, all 10 of the top 10 owned leases and/or drilled in the Marcellus/Utica. By our count, 8 of the top 10 still do. You already know that EQT/Rice will become the #1 producer. But who is #2, and #3? And what about the rest of the list? We have it for you below…
    Read More “Top 10 Natural Gas Producers in the U.S., Post-EQT/Rice Merger”

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    Radicals File Lawsuit Against WV DEP for Approving MV Pipeline

    A group of profoundly radical “environmental” organizations filed a lawsuit in the U.S. Court of Appeals for the Fourth Circuit last Friday against the West Virginia Dept. of Environmental Protection–for doing their job. Sierra Club, West Virginia Rivers Coalition, Indian Creek Watershed Association, Appalachian Voices and Chesapeake Climate Action Network has sued the DEP because the department had the audacity to conduct a very thorough review, and then issue a stream and water-crossing permit (demanded under federal law) for the Mountain Valley Pipeline (MVP). MVP is a $3.5 billion, 301-mile pipeline that will run from Wetzel County, WV to the Transco Pipeline in Pittsylvania County, VA. The project, which filed an official application with the Federal Energy Regulatory Commission in October 2015, is being built by EQT, NextEra Energy and several other partners. This is now SOP–standard operating procedure–for Big Green groups with deep pockets. Sue and keep suing in an attempt to slow and eventually kill off any project that remotely involves fossil fuels. Yes, they are RADICAL, they are EXTREME, waaaaaay outside the mainstream of American society. And they MUST BE STOPPED. When will someone launch weekly lawsuits against these Big Green organizations? Here’s the latest maddening development…
    Read More “Radicals File Lawsuit Against WV DEP for Approving MV Pipeline”

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    Is Virginia Governor Race a ‘Referendum on Pipelines’?

    Will Virginia in the south become what New York is in the north: a block to Marcellus/Utica gas leaving the region? Perhaps. At least, that’s what radical environmentalists are hoping is what happens. On June 13 Virginia will hold a primary. We recently wrote about its importance (see Fate of 2 Important Pipelines May Rest in Virginia Governor Race). Former Congressman Tom Perriello (far-left Democrat) says he’ll block both the $5 billion Atlantic Coast Pipeline and the $3.5 billion Mountain Valley Pipeline if he wins the primary and the general election. He may well win it. Antis are positioning this primary and the election as “a referendum on pipelines.” The brutal truth is that most people in the Old Dominion could care less about pipelines. It is only a small cadre of gentry-class horse farmers and radical anti-fossil fuelers who oppose the pipeline projects. But if you read local news, you wouldn’t know that. We’d like to say, “Hey, it doesn’t matter who wins, the law is the law and a governor can’t stop a federal pipeline project.” But then, we’re from New York where that is exactly what has happened! At least so far. Both the Constitution Pipeline (Williams) and the Northern Access Pipeline (National Fuel Gas Company) have been blocked by Democrat Gov. Andrew Cuomo for political reasons. Both pipelines have taken the state’s Dept. of Environmental Conservation to court, where it’s quite possible, even likely, the state will lose. However, nothing is 100% certain–and because of Cuomo’s actions, both pipelines are now years delayed. Our concern is that a major delay may happen in Virginia too, if the state elects someone like Perriello…
    Read More “Is Virginia Governor Race a ‘Referendum on Pipelines’?”

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    WV Drillers & Landowners Want New Law re Post-Production Issue

    Earlier this week MDN reported on the recent West Virginia Supreme Court decision to reverse it’s earlier decision and allow EQT (and by extension, other drillers) to deduct some post-production expenses from royalties paid to landowners (see WV Supreme Court Reverses Itself, Post-Production Deductions OK). The Leggett v. EQT case turned on the meaning of three short words: “at the wellhead” (see WV Supreme Court Post-Production Royalty Case Hinges on 3 Words). This latest final final decision must be the…well…final decision, right? Not so fast. There is another Supreme Court case from 2006, Tawney v. Columbia Natural Resources, which also dealt with post-production expenses and found drillers do not have the right to deduct them from royalties. But there are differences. “Leggett deals with the statute on royalties, while Tawney is about lease contracts.” It’s a pretty safe bet that a new case will be filed challenging Tawney in light of the Leggett decision. All of this back and forth in the courts is unsettling for both drillers and landowners. Both sides are in agreement about one thing: They both want the WV legislature to pass a new law clarifying the issue of post-production deductions…
    Read More “WV Drillers & Landowners Want New Law re Post-Production Issue”

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    PA Hearing Board Reduces EQT Fine from $4.5M to $1.1M

    In October 2014, the Pennsylvania Dept. of Environmental Protection (DEP) fined Marcellus driller EQT a whopping $4.53 million for a leaky wastewater impoundment in Tioga County, PA (see PA DEP Levies Biggest Fine Ever, $4.5M Against EQT). While EQT did not say there wasn’t a problem with leaks at the site, they did say the way the DEP calculated the fine is unreasonable and arbitrary. EQT appealed the fine and the case all the way to the PA Supreme Court. In December 2015, the high court handed EQT a “procedural victory” by saying EQT has a point about the manner in which the DEP is calculating the fine (see PA Supreme Court Gives EQT “Procedural Victory” in $4.5M Fine Case). The Supreme Court sent the case back to a lower court, PA Commonwealth Court, for follow up work, and in January 2017, a three-judge panel ruled that the method the DEP currently uses to assess fines–by how many days pollution lingers, instead of by how many days the initial release of pollution lasted–is not legal nor common sense (see EQT Wins Court Case Against PA DEP re $4.5M Wastewater Leak Fine). The judges said such a method in fining, “would result in potentially limitless continuing violations.” Under the old way of calculating fines, the DEP was considering upping the fine on EQT to an insane $157 million. Calculating it under the new way will mean a fine of around $120,000. We thought with that ruling it was all done and dusted. Not so. The soap opera continued when the DEP appealed the Commonwealth Court panel’s ruling back up to the PA Supreme Court where the Supremes will consider it all over again (see DEP Appeals $4.5M Wastewater Leak Fine Against EQT to Supremes). Into this mess, let’s now throw in another wrinkle. While the courts have been grappling with issues of procedure and whether or not the DEP can assess fines the way it claims it can (that is, Constitutional issues), at the same time the matter was brought up before the PA Environmental Hearing Board (EHB), a sort of quasi-court set up to hear appeals of decisions made by DEP. The EHB has decided to adjust the fine down significantly–from the DEP’s initial levy of $4.53 million down to $1.1 million. Here was their reasoning… Read More “PA Hearing Board Reduces EQT Fine from $4.5M to $1.1M”

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    WV Supreme Court Justice: EQT Royalty Ruling “Legal Sophistry”

    Last December the West Virginia Supreme Court ruled in a case to disallow Marcellus driller EQT from deducting post-production expenses from royalty checks, even with signed contracts in place (see WV Supreme Court Rules EQT Can’t Deduct P-P Costs from Royalties). The justices, in their ruling, said that drillers can “not deduct from that (royalty) amount any expenses that have been incurred in gathering, transporting or treating the oil or gas after it has been initially extracted, any sums attributable to a loss or beneficial use of volume beyond that initially measured or any other costs that may be characterized as post-production.” Last week, just five months later, four of five justices (including a newly elected judge) reversed their December decision (see WV Supreme Court Reverses Itself, Post-Production Deductions OK). The lone judge voting against the decision was Robin Jean Davis. Yesterday she released her dissenting opinion. In very strong language, Judge Davis said the court’s other four members “used legal sophistry” to prop up their decision, and that “the majority opinion is simply wrong.” Here’s what else Judge Davis had to say… Read More “WV Supreme Court Justice: EQT Royalty Ruling “Legal Sophistry””

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    WV Supreme Court Reverses Itself, Post-Production Deductions OK

    In a decision that will thrill drillers, but anger landowners, the West Virginia Supreme Court decided last week to overturn its own previous decision (from just last December) and allow driller EQT to deduct post-production expenses from royalty payments. Last December MDN reported on the huge West Virginia Supreme Court decision against driller EQT that disallows EQT from deducting post-production expenses from royalty checks, even with signed contracts in place (see WV Supreme Court Rules EQT Can’t Deduct P-P Costs from Royalties). The justices, in their ruling, said that drillers can “not deduct from that (royalty) amount any expenses that have been incurred in gathering, transporting or treating the oil or gas after it has been initially extracted, any sums attributable to a loss or beneficial use of volume beyond that initially measured or any other costs that may be characterized as post-production.” A really big deal. Then in February, with a brand new justice on the bench, the WV Supreme Court agreed to rehear the case after an appeal filed by EQT–a rare and unusual step (see EQT Catches Big Break in WV Supreme Court re Royalty Deductions). Those who won the case say newly elected Supreme Court Justice Elizabeth D. Walker has conflicts of interest and should not have been allowed to vote to rehear the case in the first place (which she did). On that basis, they tried to avoid the rehearing altogether, but that failed, and lawyers were in court arguing the case earlier this month. As it turns out, the lawyers mainly argued over the meaning of three short words: “at the wellhead” (see WV Supreme Court Post-Production Royalty Case Hinges on 3 Words). On Friday, the justices reversed their earlier decision, voting 4-1 in favor of allowing EQT to deduct “reasonable” post-production expenses (copy of the decision below). Newly elected Justice Beth Walker, with (according to the other side) conflicts of interest, voted in favor of EQT. This has BIG implications for landowners and drillers in the Mountain State… Read More “WV Supreme Court Reverses Itself, Post-Production Deductions OK”