Page 8 - NorthAmOil Week 18 2021

NorthAmOil INVESTMENT NorthAmOil

EQT to buy Alta Resources

in $2.9bn Marcellus deal

US NORTHEAST US-BASED EQT has struck a deal to buy Alta in its free cash flow (FCF) increasing by 55%, or
Resources Development for $2.93bn in cash and $2.0bn, by 2026, while FCF per share is antici-
stock. The transaction will expand EQT’s posi- pated to improve by more than 15% over the
tion in the Marcellus shale gas formation in the same period.
US Northeast, giving it a foothold in a part of the “This strong free cash flow contribution is
region that it is not yet present in. a result of Alta’s low-cost structure, driven by
In a May 6 statement, EQT described Alta as low royalty burdens averaging 14%, direct min-
having a “highly prolific inventory with superior eral ownership, a premium firm transportation
well economics in the core of the Northeast Mar- portfolio and an owned and operated midstream
cellus”. The acquisition will add 300,000 net acres gathering system serving the operated acreage
(1,214 square km), and 1bn cubic feet (28.3mn position,” EQT stated.
cubic metres) of production, comprised of 100% The deal follows EQT’s acquisition of Chev-
dry gas. ron’s assets in the Appalachian Basin, which
“The acquisition of Alta’s assets represents holds the Marcellus and Utica shale plays, for
an attractive entry into the Northeast Marcellus $735mn in late 2020. The company also report-
while accelerating our deleveraging path, pro- edly made a failed bid to take over rival CNX
viding attractive free cash flow per share accre- Resources last year, Reuters noted.
tion for our shareholders and adding highly This comes amid EQT’s overhaul of its oper-
economic inventory to EQT’s already robust ations in an attempt to bolster its performance
portfolio,” stated EQT’s president and CEO, Toby and maximise returns, which started when Rice
Rice. took over the leadership of the company in 2019.
Indeed, EQT projects that the deal will result EQT is the US’ largest natural gas producer.™

Williston Basin assets changing hands

WILLISTON OASIS Petroleum announced this week that Mill Energy, which is backed by private equity
BASIN it had agreed to acquire Diamondback Ener- firm EnCap Investments, illustrates how shale
gy’s assets in the Williston Basin – home to the valuations have fallen over the past decade. The
Bakken and Three Forks plays – for $745mn transaction consisted of 242,000 net acres (979
in cash. The news came days after Norway’s square km) with 48,000 boepd of production in
Equinor said it had completed its own sale of the fourth quarter of 2020, as well as associated
Bakken assets for $900mn. midstream infrastructure.
Diamondback acquired its Williston Basin Equinor is in the process of optimising its
assets through its merger with QEP Resources, portfolio, and also sold its Eagle Ford shale assets
which closed in March. The company’s focus is to Repsol for $325mn in late 2019.
on the Permian Basin, which spans Texas and Production from the Williston Basin’s plays
New Mexico, so it has moved quickly to dispose – especially the North Dakota Bakken – has
of the Williston assets in North Dakota and boomed thanks to horizontal drilling and
Montana. Diamondback also said this week that hydraulic fracturing. However, it has been hurt
it had agreed to sell certain non-core Permian by oil price volatility in recent years, as shale
assets for around $87mn, without disclosing drillers flocked to the more profitable Permian
who the buyers are. Basin instead.
The assets comprise roughly 95,000 net acres Some operators continue to target the
(384 square km) and produced around 27,000 Bakken, though, with Continental Resources, a
barrels of oil equivalent per day (boepd) in the leading producer in the region, saying last week
first quarter of 2021. The deal is set to close in the that it would ramp up activity in the play this
second or third quarter of this year. year. And the fact that both Diamondback and
Equinor, meanwhile, entered the Williston Equinor have found buyers for relatively large
Basin in 2011 by acquiring Brigham Exploration asset acquisitions also suggests that the region
for $4.7bn. The sale of these assets, to Grayson remains attractive.™

P8 www. NEWSBASE .com Week 18 06•May•2021