EQT signs deal to buy Chevron’s assets in Appalachian basin

Natural gas producer EQT will acquire Chevron USA’s upstream and midstream assets in the Appalachian Basin after the companies signed an agreement.

The deal is valued at $735m.

EQT said that it intends to fund the acquisition with cash and borrowings.

Assets under the deal include about 100 work-in-progress wells, acreage in the Marcellus basin, and a 31% ownership in Laurel Mountain Midstream, a joint venture between Chevron, producer Laurel Mountain, and pipeline operator Williams.

EQT President and CEO Toby Rice said:  “This acquisition is a natural bolt-on extension of EQT’s dominant position in the core of the southwest Marcellus and supplements our already impressive asset base.

“With the purchase price underpinned by PDP value, the extensive work-in-progress well inventory, core undeveloped acreage and water assets provide material value upside. Our unique knowledge of these assets, coupled with our superior operating model, puts these assets in the right hands to maximise the embedded value.”

The deal comes during the time of a pandemic crisis, which has seen energy demand crashed and oil prices fall to historic lows, forcing producers to cut costs, according to Reuters.

The transaction is subject to customary closing conditions and is expected to be finalised in the fourth quarter this year.

Rice added: “The digital work environment and business processes that we have created will allow for the seamless integration of these assets into our existing portfolio, while the favourable financial impacts will benefit both equity and debt holders.”

It has an effective date under the purchase and sale agreement of 1 July 2020.

Jefferies LLC has been appointed as the financial advisor to EQT for the transaction.