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EQT bulks up with Rice acquisition
Posted on Monday, 19 June 2017 13:42
EQT is acquiring Rice Energy for USD 6.70 billion and assuming USD 1.50 billion of net debt to become the largest US natural gas producer with pro forma combined full-year expected output of 1.30 trillion cubic feet equivalent.
The deal is on course to be among the 20 largest public takeovers of a US oil and gas extraction and pipeline transportation company on record, according to Zephyr, the M&A database published by Bureau van Dijk.
At an implied value of USD 27.04 apiece, the cash and share offer is 37.3 per cent higher than the last unaffected closing price of USD 27.04, before investors pushed up shares by 28.5 per cent in pre-market trading.
EQT will end up paying USD 5.40 billion in equity and USD 1.30 billion in cash, and expects to end up with 65.0 per cent of the combined entity.
Rice is an independent natural gas and oil company focused on the acquisition, exploration and development of natural gas and oil properties in the Appalachian Basin.
Upstream assets comprise acres across Marcellus, Upper Devonian, Utica and Ohio Utica which are expected to have average sales volume of 1.30 billion cubic feet equivalent in 2017.
EQT is also obtaining Rice’s midstream activities including a 92.0 per cent interest in Rice Midstream GP Holdings, which owns all the general partner incentive distribution rights and 28.0 per cent of the limited partner interests in Rice Midstream Partners
The group has earmarked certain assets for future dropdowns to EQT Midstream Partners which are expected to generate about USD 130.00 million of earnings before interest, tax, depreciation and amortisation in 2018.
EQT expects the acquisition will significantly improve well returns in the Greene and Washington counties, and give it control of natural gas gathering systems which will be the fourth largest in the US.
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