EQT Acquisition of Chevron’s Natural Gas Assets in Appalachia

Natural gas industry continues to ignore the public interest (GHG)

From an Article by Paul J. Gough, Pittsburgh Business Journal, January 6, 2021

EQT Corp.’s $735 million acquisition of Chevron Corp.’s Appalachian assets was one of the five biggest deals in the oil and natural gas industry in the fourth quarter of 2020, according to energy analysis firm Enverus.

Chevron’s natural gas wells, acreage and gathering pipeline system was the product of more than a decade of acquisitions and organic growth in southwestern Pennsylvania, West Virginia and Ohio. But Chevron , which decided to divest in Appalachia in favor of other parts of its business including the Permian Basin, put it up for bid in a process that took longer than expected due to the global Covid-19 pandemic.

EQT was the successful bidder in a deal, which could close at any time, that was considered to be a very good move from the Pittsburgh-based natural gas driller.

EQT’s bid for Chevron’s Appalachia assets was the fifth-largest deal on Enverus’ list of the 4Q 2020 upstream oil/gas assets. It was also the only Marcellus/Utica Shale acquisition in the top five, which was led by ConocoPhillips’ $13.3 billion acquisition of Concho Resources in the Permian basin.

The other three in the top five were also in the Permian Basin: (3) Pioneer Natural Resources acquisition of Parsley Energy for $7.6 billion, (4) Diamondback’s $2.1 billion acquisition of QEP Resources, and (5) Diamondback’s acquisition of Guidon Operating for $862 million.

It’s the third most-active quarter for shale M&A since 2014, according to Enverus. There were 140 announced deals in all of 2020, which was the lowest in the industry since 2006. Andrew Dittmar, M&A analyst for Enverus, said that the surge in the fourth quarter was due to the fact that companies are looking to scale up for the future.

“Wall Street appears supportive of E&P deals, but with very specific expectations on deal structure and the quality of the merger target,” said Dittmar. “The limiting factor for consolidation will be the number of attractive merger partners left at the end of a very active year.”

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See also: Why Southwestern Energy’s acquiring Montage Resources, Paul J. Gough – Reporter, Pittsburgh Business Times, Houston Business Journal, Aug 16, 2020

When Southwestern Energy Co. acquires Montage Resources Corp. later this year (completed in November 2020), the combined company will likely be the third-largest natural gas producer in Appalachia — and a step closer to consolidation in the industry that has been hinted at but not yet become reality.

Springwoods Village-based Southwestern announced Aug. 12 that it would merge with Irving, Texas-based Montage in an all-stock transaction valued at more than $200 million. The deal will likely close in the fourth quarter, pending approval from Montage shareholders. Montage’s biggest shareholder, Houston-based EnCap Investments, has agreed to vote its 39% stake in favor of the merger.

The deal will boost Southwestern’s position in northern West Virginia and eastern Ohio, providing more acreage in West Virginia than Southwestern has now and giving Southwestern a presence in Ohio. Southwestern is the fifth-largest shale gas producer in Pennsylvania. All of its holdings in the state are in the dry gas region of northeastern Pennsylvania.