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EQT announces $5.2bn
Appalachian acquisition
APPALACHIAN SHALE gas producer EQT said this week that it cubic feet (28mn cubic metres) per day of gas
BASIN had entered into an agreement with THQ Appa- equivalent and lean gas trunkline with capacity
lachia I and THQ-XcL Holdings I to acquire of 3.5 bcf (99 mcm) per day of gas equivalent,
Tug Hill’s upstream operations and XcL’s mid- along with 600mn cubic feet (17 mcm) per day
stream gathering and processing assets. In total, of compression capacity. Also included is the 225
EQT will pay $5.2bn for the assets, comprised of mmcf (6.4 mcm) per day Clearfork processing
$2.6bn in cash and $2.6bn in stock. plant and 20,000 barrels per day (bpd) of con-
Tug Hill and XcL are backed by equity com- densate stabilisation capacity.
mitments from funds managed by Quantum The acquisition, which is expected to close
Energy Partners. Once the deal closes, Quan- in the fourth quarter of 2022, is the latest in
tum’s founder and CEO, Wil VanLoh, will join a series made by EQT over the past couple of
EQT’s board of directors. years as it consolidates its Appalachian posi-
The upstream assets, described as a “strategic tion. The company’s notable recent trans-
bolt-on” acquisition, include roughly 90,000 net actions include its purchase of Chevron’s
acres (364 square km) offsetting EQT’s exist- Appalachian assets for $735mn in 2020 and its
ing core leasehold position in West Virginia. takeover of Alta Resources Development for
The assets are 96% operated, with a roughly $2.9bn last year.
83% net revenue interest, according to the The moves proved timely, with gas prices and
announcement. demand on the rise since 2020.
The midstream assets consist of 95 miles (153 EQT president and CEO Toby Rice said he
km) of owned and operated gathering systems expects the latest acquisition to lower the com-
that EQT said connect to “every major long-haul pany’s free cash flow breakeven price by around
interstate pipeline in south-west Appalachia”. $0.15 per million British thermal units ($4.15 per
They include rich gas trunkline capacity of 1bn 1,000 cubic metres).
Sitio to buy Brigham in $1.5bn
mineral and royalty merger
US SITIO Royalties announced this week that it the combined entity as a “premier consolidator
had agreed to acquire Brigham Minerals in an in the fragmented minerals space”. In total, the
all-stock merger valued at around $1.5bn. combined company would have 259,510 net roy-
The merger is expected to create an entity alty acres (1,050 square km), with net produc-
with an aggregate enterprise value of around tion of 32,800 barrels of oil equivalent per day
$4.8bn, based on the closing share prices of both (boepd) as of the second quarter of 2022.
companies’ stocks on September 2. It will be the “Our merger with Sitio creates the indus-
largest publicly traded company in the mineral try leading powerhouse in the minerals space
and royalty space in the US. with over 30% coverage in the Permian Basin,
“Our combined company will be the approximately 100 rigs running across all of our
largest publicly traded mineral and royalty operating basins and greater than 50 activity
company in the US by enterprise value that wells to continue to drive production and cash
is focused on consolidation across a diverse flow growth,” stated Brigham’s CEO, Rob Roosa.
set of operators and geographies,” stated Sitio’s “We believe the merger is the logical next step
CEO, Chris Conoscenti. “We will be able to in the continued evolution of the minerals space
pursue opportunities that few others can and creates an entity of scale with ever improving
because of the size of our business, strength liquidity and float, as well as a streamlined cost
of our balance sheet, optimised cost structure structure that further reinforces the scalability of
and access to capital.” our industry.”
The companies have “complementary Royalties can amount to up to 25% of an oil
high-quality assets” in the Permian Basin, as and gas well’s production, and companies in the
well as in other regions including the Eagle Ford mineral and royalty space can benefit from this
shale and the Denver-Julesburg (DJ), Williston, while being less exposed to operational risks
Anadarko and Appalachian basins. They view than exploration and production companies.
Week 36 08•September•2022 www. NEWSBASE .com P7
