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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
Chord Energy Corp. Expands Williston Basin Footprint with $375 Million Acquisition from Exxon Mobil
Chord Energy Corp.'s subsidiary has entered into an agreement to purchase assets in the Williston Basin from Exxon Mobil, and its affiliates for $375 million. Chord Energy, a US independent company, is strategically expanding its presence in the Williston Basin of Montana and the Dakotas. While industry attention remains fixated on the Permian Basin, Chord Energy recognizes the potential of the Williston Basin and is capitalizing on the opportunity to enhance its reserve portfolio. Chord Energy successfully completed the acquisition of 62,000 acres in the Williston Basin from XTO Energy for a substantial cash consideration of $375 million.
TotalEnergies kicked off 2024 with a net income of $5.7 billion in the first quarter, marking a modest 3% increase from the same period last year and a 13% rise from the previous quarter. This growth occurred despite experiencing drops in both the volume and price of gas sales over the year and the quarter. Their adjusted net earnings, which exclude one-time or unusual items, were $5.1 billion. This represents a significant 22% decline compared to last year and a slight 2% drop from the last quarter. The company's earnings before tax, depreciation, and amortization reached $11.5 billion, while their cash flow from operations significantly decreased to $2.2 billion, falling by 58% from last year and a steep 87% from the previous quarter. TotalEnergies also recorded $644 million in impairments.
New Mexico leads the Rockies region in gas production and ranks as the sixth-largest in terms of active gas wells in the U.S. Last year, the state's gas well count slightly increased by 0.2% to 30,699, with new additions in both the northwestern San Juan Basin and the southeastern Permian Basin. Meanwhile, just to the north in Colorado, gas producers grew by a modest 0.1% to 30,322, primarily due to increased drilling activity in the DJ and Piceance basins. Wyoming saw a decline in its active gas wells by 3.7%, down to 17,006, with production mainly in Sublette, Sweetwater, and Converse counties reflecting stable or slightly reduced drilling activity. Utah also experienced a slight decrease of 0.2% in its number of gas wells, totaling 6,463. In Q1 2024, oil and gas industry activity in Oklahoma, Colorado, and northern New Mexico experienced a decline. This marks the fifth consecutive quarter of contraction in drilling and business activities within these regions. According to a survey that included responses from 33 firms operating in the Rockies, this downtrend is expected to continue over the next six months.
The Williston Basin is a big area filled with layers of rock that sits next to the Rocky Mountains in western North Dakota, eastern Montana, and the southern part of Saskatchewan in Canada. This area covers roughly 110,000 square miles. Geologically, it's very similar to the Alberta Basin in Canada. People started drilling for oil in the Williston Basin back in 1936, and by 1954, most of the land where oil could likely be found was already claimed for drilling. The Bakken Formation with parts of Montana, North Dakota, Saskatchewan, and Manitoba has become one of only ten oil fields globally to yield over 1 million barrels per day (bpd) since the late 2000s. It is currently the third-largest U.S. shale oilfield, behind the Permian and Eagle Ford. The boom in the Bakken started around September 2008, coinciding with the U.S. housing market crash. The application of new technologies, such as swell packers enabling multiple-stage fracturing, significantly enhanced oil recovery, making the Bakken Formation a key player in the U.S. In 2022, the Bakken oil field saw big improvements in how much oil and gas it could produce. At the start of the year, 27 drilling rigs were working there, more than double the 11 rigs from the start of 2021. Important upgrades included making the Tioga Gas Plant able to process 150 million cubic feet more gas each day, and making the Dakota Access Pipeline bigger, increasing its oil transport capacity from 570,000 to 750,000 barrels every day.