EQT Corporation (NYSE: EQT) today announced that it has closed a transaction to sell certain non-strategic assets and implemented a strategic volume curtailment program.
Asset Sale:
EQT has closed a transaction to sell certain non-strategic assets located in Pennsylvania and West Virginia to Diversified Gas and Oil PLC, for an aggregate purchase price of $125 million in cash, subject to customary closing adjustments. The transaction includes potential contingent consideration of up to an additional $20 million, payable based on certain future commodity price targets. Additionally, the transaction relieves EQT of approximately $47 million in asset retirement obligations and other liabilities associated with the assets. Proceeds from the sale have been used to pay down EQT's term loan due 2021.
Asset Description:
- Pennsylvania: Cameron, Clarion, Clearfield, Elk, Indiana, Jefferson, and Tioga Counties
- 80 Marcellus wells with current net production of approximately 50 MMcfe per day
- Leasehold and drilling rights retained on all acreage, excluding Tioga County
- 33 miles of gathering lines
- West Virginia: Doddridge, Harrison, Marion, Monongalia, Ritchie, Taylor, Tyler, and Wetzel Counties
- 809 Conventional wells with current net production of approximately 3 MMcfe per day
- Leasehold and drilling rights retained on all acreage
- 154 miles of gathering lines
President and CEO Toby Rice stated: "The closing of this non-strategic asset sale demonstrates our commitment to improving the balance sheet and reducing debt. These assets sit outside our core focus area and the divestment will enable a heightened focus on our core asset portfolio. Additionally, the transaction relieves EQT of the higher relative operating costs and substantial asset retirement obligations associated with these assets and will improve our financial standing."
Strategic Volume Curtailment:
On May 14, 2020, EQT made the strategic decision to temporarily curtail approximately 1.4 Bcfe per day of gross production, equivalent to approximately 1.0 Bcfe per day of net production, beginning on May 16, 2020. The Company believes these actions to be value accretive, as the deferred production will be monetized at a higher forward commodity price. The duration of the curtailment will be subject to commodity price movements, relationships and resulting economics, and could potentially continue through the end of the second quarter 2020.
Assuming production remains curtailed at this level through June 30, 2020, EQT would expect its second quarter 2020 total sales volumes to be 315 – 335 Bcfe, approximately 45 Bcfe lower than its previously announced guidance range of 360 – 380 Bcfe. The Company reiterates its second quarter 2020 average differential guidance of $(0.45) – $(0.25) per Mcf. Due to the fixed cost nature of certain operating costs, second quarter 2020 total per unit operating costs are expected to be at the high-end of the Company's full-year guidance range of $1.34 – $1.46 per Mcfe.
EQT expects no changes to its full-year 2020 guidance and reiterates its previously announced full-year 2020 production and financial guidance.
About EQT Corporation:
EQT Corporation is a leading independent natural gas production company with operations focused in the cores of the Marcellus and Utica Shales in the Appalachian Basin. We are dedicated to responsibly developing our world-class asset base and being the operator of choice for our stakeholders. By leveraging a culture that prioritizes operational efficiency, technology and sustainability, we seek to continuously improve the way we produce environmentally responsible, reliable and low-cost energy. We have a longstanding commitment to the safety of our employees, contractors, and communities, and to the reduction of our overall environmental footprint. Our values are evident in the way we operate and in how we interact each day – trust, teamwork, heart, and evolution are at the center of all we do.
