Anatomy of a Merger – The Years’ Long Road to EQT/Rice Deal
In June EQT and Rice Energy announced that EQT will buy out and merge in Rice Energy, to create (in EQT) 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). You may see headlines from time to time that say EQT is paying $6.7 billion for Rice. However, EQT is also assuming $1.5 billion worth of Rice Energy debt as part of the deal–so in our book, the total price paid is $8.2 billion, not $6.7 billion. Have you ever wondered how a massive deal like this comes together? Did the top brass at EQT phone up the top brass at Rice and say “let’s go for coffee” and a few months later there’s a deal? Nope. Doesn’t happen that way. In paperwork filed with the Securities and Exchange Commission, EQT (and Rice) outlined the chronology of how this deal came together. It’s far more complicated than the most complicated soap opera you can imagine. The story begins with EQT keeping a close eye on available acreage in the southwestern Marcellus region. EQT noticed an “accelerating trend” of consolidation. In 2015, a full two years before the EQT/Rice announcement, EQT lusted for more acreage and feared that if Rice combined with someone else, an important opportunity would be lost. So EQT got outside help (Wachtell Lipton) to begin the process of evaluating a buyout of Rice (June 2015). In July 2015, the muckety mucks from both Rice and EQT got together to talk, and “informally” discussed the potential benefits of a merger. But the talks went nowhere at the time. In early 2016, two other companies (unnamed) held similar talks with Rice. EQT then jumped back into the mix, in May 2016. EQT and Rice promptly got more serious about sniffing around each other, signing confidentiality agreements and beginning the due diligence process. Things moved quickly. Rice investigated mergers with two other companies and with EQT. EQT pressed Rice for an answer in July 2016. Talks broke down by the end of the summer in 2016. Rice then bought out Vantage and EQT snapped up more Marcellus acreage in various deals. And the soap opera goes on from there. We have the full script below…
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My how times change. Just last October EQT indicated that in the not-too-distant future the company would be primarily a Utica Shale driller (see 
NGI’s Shale Daily has done it again. Ace reporter Jamison Cocklin has unearthed news that (so far) no one else has: Rice Energy has quietly, confidentially, hush-hush purchased all of the assets of LOLA Energy. The sale raises a lot of questions. But first, who is LOLA? No, not the show girl in Barry Manilow’s 1978 hit song Copacabana. LOLA Energy was birthed near the end of 2015, by former EQT executives using $250 million of private equity money from Denham Capital (see 
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 
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 
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 
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 
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 
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 
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…
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…
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…
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 
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