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EQT Completes Long-Awaited $5.2 Billion Acquisition of Tug Hill and XcL Midstream
09/07/2023
EQT disbursed roughly $2.4 billion in cash and issued 49.6 million shares of its common stock to acquire the Tug Hill and XcL Midstream assets.
On August 22, EQT Corp. announced the completion of its long-delayed acquisition of XcL Midstream, following extensive Federal Trade Commission (FTC) reviews. The final purchase, post-price adjustments, consisted of about $2.4 billion in cash and 49.6 million EQT common shares. The cash component was financed through a $1.25 billion term loan, $1 billion from existing cash reserves, and a previously escrowed $150 million deposit.
FTC Clears EQT's Deal with Quantum
Shortly after gaining FTC approval, which addressed antitrust issues between EQT and Quantum Energy Partners, EQT has finalized its acquisition of Tug Hill and XcL Midstream. A consent order ensures both companies maintain confidentiality and avoid competitive conflicts, according to an FTC release on August 16.
EQT CEO Toby Z. Rice states that the merger, first revealed on July 22, integrates the teams of Tug Hill and XcL Midstream into EQT. He further highlights that the acquired assets are among the most cost-efficient in the Appalachian region, promising to reduce EQT's NYMEX free cash flow breakeven price by around $0.15 per MMBtu. Rice also sees potential annual synergies exceeding $80 million, which could further trim corporate expenses.
Tug Hill's upstream assets currently have an average output of around 800 million cubic feet per day, with liquids yield of 20%.
XcL Midstream contributes 145 miles of owned and operated midstream gathering systems, offering connections to all significant long-haul interstate pipelines in southwest Appalachia. EQT intends to offer updated financial projections in line with its third-quarter earnings report.
About EQT Corporation
EQT Corporation is a premier independent natural gas producer, primarily active in the Marcellus and Utica Shales within the Appalachian Basin. Committed to responsible development, the company aims to be the preferred operator for all stakeholders. EQT prioritizes operational efficiency, technology, and sustainability to produce reliable, low-cost, and environmentally responsible energy. With a deep-rooted focus on safety and environmental stewardship, EQT is driven by core values of trust, teamwork, heart, and evolution.
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WhiteHawk Energy Secures $100M Finance Facility for Core Natural Gas Asset Acquisition
WhiteHawk Energy LLC completed its second Haynesville Shale mineral and royalty acquisition of the year, spanning northwestern Louisiana and eastern Texas. WhiteHawk also secured a $100 million acquisition finance facility from an undisclosed "top tier institution." The company will utilize $20 million from this facility to fund the Haynesville purchase from Mesa Minerals Partners II LLC
Chevron Announces Intent to Divest Oil and Gas Properties in New Mexico and Texas
According to Reuters, Chevron has recently made additional assets available for acquisition in both New Mexico and Texas. As part of its strategy to streamline operations following significant shale acquisitions, Chevron is reportedly offering multiple oil and gas properties for sale in New Mexico and Texas. Marketing documents reviewed by Reuters reveal the company's intention to divest these assets. Despite its prominent position as the largest publicly-traded oil and gas producer and property owner with 2.2 million acres in the Permian Basin of West Texas and New Mexico, Chevron has been actively divesting properties in the region. This divestment aligns with Chevron's efforts to optimize its portfolio and focus on its core operations.
Kinetik Holdings recently announced a series of transactions in the energy sector. They struck a deal to buy Durango Permian infrastructure for $765 million. At the same time, they're selling their 16% share in the Gulf Coast Express Pipeline to ArcLight Capital Partners for $540 million. The total purchase cost includes $510 million in cash paid immediately and an additional $30 million that will be paid later, depending on whether they decide to expand further.
Recently, the Permian has seen significant acquisitions: Exxon Mobil purchased Pioneer Natural Resources for about $60 billion. Diamondback Energy's $26 billion deal to acquire Endeavor Energy Resources is currently on hold due to requests from the U.S. Federal Trade Commission. Occidental’s acquisition of CrownRock for $12 billion in the Midland.
EOG Resources is pushing boundaries in Ohio's Utica oil play and now drilling on the Sable pad, also located in Noble County. This site features the 3.7-mile lateral currently under construction. The company's first multi-well pads in the area Timberwolf and Xavier have each produced over 200,000 barrels of oil since their inception—Timberwolf in August and Xavier in October. A third site, the four-well White Rhino pad in Noble County, is also showing promising early results, according to Keith Trasko, EOG’s Senior Vice President of Exploration and Production, who noted the wells are performing as expected in their initial weeks.