It’s hard to think of a $5.2 billion acquisition as a “bolt-on,” but that’s what EQT Corp. — the U.S.’s #1 natural gas producer — is calling its recently announced purchase of Tug Hill’s gas production assets and XcL Midstream’s pipeline and processing assets in northern West Virginia. The deal, which represents the largest acquisition in the Marcellus/Utica Shale in five years, will not only give EQT even more scale in the nation’s leading gas-and-NGLs production region, it also will lower EQT’s breakeven gas price and its emissions intensity. Oh, and with the deal, EQT is doubling its share-repurchase authorization and increasing its year-end-2023 debt-reduction goal by 60%. In today’s RBN blog, we examine and assess these and other aspects of the agreement.
Several factors have been driving the frenzy of M&A activity in the U.S. oil and gas space, including (1) renewed confidence that, despite the likelihood of a near-term recession, hydrocarbon demand — and prices — will remain strong for years to come; (2) a preference among many larger E&Ps to grow production and free cash flow through acquisition, not aggressive capital spending; and (3) a desire by many smaller, privately held producers (and midstreamers) to cash in now and reap big gains as they do.
As we said in Buy, Buy, Buy, most of the major deals announced since COVID arrived in early 2020 have involved one big, publicly traded E&P buying another, typically via all-stock transactions — these include ConocoPhillips’s $13.3 billion acquisition of Concho Resources, Chevron’s $13 billion purchase of Noble Energy, Cabot Oil & Gas’s $9.3 billion buy of Cimarex Energy (the combined company is now known as Coterra Energy), and Pioneer Natural Resources’s $7.6 billion acquisition of Parsley Energy. There also were a number of public-buys-private deals, however, exemplified by Pioneer’s agreement to buy DoublePoint Energy for $6.4 billion, as well as many mergers and acquisitions involving smaller producers, which we focused on in Baby I’m-A Want You.
NATGAS Billboard is a daily, early morning email and report that provides an up-to-the-minute view of the natural gas market outlook, including storage injections/withdrawals and price. Billboard’s models incorporate pipeline flow data, weather models, electricity demand data and more.
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About the song
“Take Me Home, Country Roads” was written by Bill Danoff, Taffy Nivert, and John Denver. It appears as the first song on side two of John Denver’s fourth studio album, Poems, Prayers & Promises. With its reference to West Virginia in the opening verse lines — “Almost heaven, West Virginia, Blue Ridge Mountains, Shenandoah River” — the tune in March 2014 it become one of the four official state songs for West Virginia. Released as a single in April 1971, the song went to #2 on the Billboard Hot 100 Singles chart and has been certified Platinum by the Recording Industry Association of America (RIAA). A number of different artists have covered the song over the years, including Hermes House Band, Olivia Newton-John, and Jason & The Scorchers. Personnel on the record were: John Denver (lead vocals, 6- and 12-string acoustic guitars), Bill Danoff and Taffy Nivert (backing vocals), Eric Weissberg (banjo, steel guitar), Richard Kniss (bass), and Gary Chester (drums, percussion).
Poems, Prayers & Promises was recorded in 1970-71 at RCA Studios in New York City. Produced by Milton Okun and Susan Ruskin, the album was released in April 1971. It went to #15 on the Billboard 200 Albums chart and has been certified Platinum by the RIAA. Two Top 10 singles were released from the LP.
John Denver (John Deutschendorf Jr.) was an American singer, songwriter, guitarist, and actor. He began his professional career in the 1960s as a member of the folk group, The Chad Mitchell Trio. He started his solo career with the release of his first album on RCA Records in 1969. Denver released 30 studio albums, eight live albums, 17 compilation albums, and 44 singles and has sold more than 33 million records worldwide. He appeared in several television shows and in eight motion pictures. He has won one ACM Award, three American Music Awards, two CMA Awards, one Emmy Award, and two Grammy Awards. Denver is a member of the Songwriters Hall of Fame and has a star on the Hollywood Walk of Fame. He died in October 1997 at the age of 53.
