EQT Corporation (NYSE:EQT) and Rice Energy Inc. (NYSE:RICE)
announce that they have entered into a definitive merger agreement
under which EQT will acquire all of the outstanding shares of Rice
common stock for total consideration of approximately $6.7 billion
– consisting of 0.37 shares of EQT common stock and $5.30 in cash
per share of Rice common stock. EQT will also assume or refinance
approximately $1.5 billion of net debt and preferred equity. The
transaction is expected to close in the fourth quarter of 2017,
subject to customary closing conditions.
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"This transaction brings together two of the top Marcellus and
Utica producers to form a natural gas operating position that will
be unmatched in the industry. Rice has built an outstanding company
with an acreage footprint that is largely contiguous to our
existing acreage, which will provide substantial synergies and make
this transaction significantly accretive in the first year, said
Steve Schlotterbeck, EQT's president and chief executive
officer.
“Since the beginning of 2016, we have added more than 485,000
acres to our development portfolio and have achieved significant
scale in the core of the Marcellus. We will now shift our focus
from acquisitions to integration as we work to drive higher capital
efficiency through longer laterals; reduce per unit operating costs
through operational and G&A synergies; improve our sales
portfolio by expanding access to premium markets; and deliver
increased value to our shareholders," continued Schlotterbeck.
Daniel J. Rice IV, chief executive officer, Rice Energy, stated,
“Natural gas is the key to a cleaner energy world; and the
combination of Rice and EQT – two of the United States’ largest,
lowest-cost, and most responsible natural gas producers – creates
an unparalleled leader in shale gas development that will benefit
the environment and our shareholders for many decades to come.”
As the vast majority of the acquired acreage is contiguous with
EQT's existing acreage position, EQT anticipates a 50% increase in
average lateral lengths for future wells located in Greene and
Washington Counties in Pennsylvania. This same land synergy also
complements the infrastructure footprint of EQT Midstream Partners,
LP (NYSE:EQM), where growth opportunities are expected through
drop-downs and additional organic projects. Already a leading
producer in the Appalachian Basin, this acquisition will make EQT
the largest natural gas producer in the United States.
Acquisition Highlights
Acquisition
Post-Transaction
Core acres (net)
Marcellus 187,000 670,000 Upper
Devonian 64,000 149,000 PA & WV
Utica 105,000 616,000 OH Utica
65,000 65,000
Total undeveloped locations
Marcellus 980
3,700 Upper Devonian 430
955 PA & WV Utica 630 3,680 OH
Utica 280 280
2017E average sales volume
(Bcfe/d) 1.3 3.6
EQT will also obtain Rice’s midstream assets, including a 92%
interest in Rice Midstream GP Holdings LP, which owns 100% of the
general partner incentive distribution rights and 28% of the
limited partner interests in Rice Midstream Partners LP (NYSE:RMP),
and the retained midstream assets currently held at Rice. The
retained midstream assets, which EQT intends to sell to EQM in the
future through drop-down transactions, are expected to generate
approximately $130 million of EBITDA in 2018. See the Non-GAAP
Disclosures section for important information regarding the
non-GAAP financial measures included in this news release.
The boards of directors of both companies have unanimously
approved the transaction. Completion of the transaction is subject
to the approval of both EQT and Rice shareholders, as well as
certain customary regulatory and other closing conditions.
Webcast Information
EQT will host a conference call with security analysts at 10:30
a.m. Eastern Time today. A brief Q&A session for security
analysts will immediately follow the transaction discussion. Slides
accompanying the prepared remarks are available on our website at
ir.eqt.com. The conference call will be broadcast live via the EQT
investor information page at ir.eqt.com, with a replay available
for seven days following the call.
NON-GAAP DISCLOSURES
Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA)
As used in this news release, EBITDA means the earnings before
interest, taxes and depreciation of Rice’s retained midstream
assets. EBITDA of these assets is a non-GAAP supplemental financial
measure that management and external users of EQT’s consolidated
financial statements, such as industry analysts, investors, lenders
and rating agencies, use to assess the potential contribution of
Rice’s retained midstream assets to EQT’s future operating
performance and cash flows.
EQT believes that the projected EBITDA of Rice’s retained
midstream assets provides useful information to investors in
assessing the viability of the proposed transaction and the related
return on investment as well as the future impact of the assets on
EQT's financial condition and results of operations. EBITDA should
not be considered as an alternative to net income, operating
income, or any other measure of financial performance or liquidity
presented in accordance with GAAP. EBITDA has important limitations
as an analytical tool because it excludes some, but not all, items
that affect net income. Additionally, because EBITDA may be defined
differently by other companies in EQT's industry, the definition of
EBITDA may not be comparable to similarly titled measures of other
companies, thereby diminishing the utility of the measure.
Advisors
Citigroup acted as financial advisor and Wachtell, Lipton, Rosen
& Katz acted as legal advisor to EQT for the transaction.
Barclays Capital Inc. acted as financial advisor and Vinson &
Elkins LLP acted as legal advisor to Rice Energy.
About EQT Corporation:
EQT Corporation is an integrated energy company with emphasis on
Appalachian area natural gas production, gathering, and
transmission. With more than 125 years of experience, EQT continues
to be a leader in the use of advanced horizontal drilling
technology – designed to minimize the potential impact of
drilling-related activities and reduce the overall environmental
footprint. Through safe and responsible operations, the Company is
committed to meeting the country’s growing demand for clean-burning
energy, while continuing to provide a rewarding workplace and
enrich the communities where its employees live and work. EQT also
owns a 90% limited partner interest in EQT GP Holdings, LP. EQT GP
Holdings, LP owns the general partner interest, all of the
incentive distribution rights, and a portion of the limited partner
interests in EQT Midstream Partners, LP.
Visit EQT Corporation at www.EQT.com.
About Rice Energy:
Rice Energy Inc. is an independent natural gas and oil company
focused on the acquisition, exploration and development of natural
gas and oil properties in the Appalachian Basin. For more
information, please visit our website at www.riceenergy.com.
Cautionary Statement Regarding Forward-Looking
Information
This communication may contain certain forward-looking
statements, including certain plans, expectations, goals,
projections, and statements about the benefits of the proposed
transaction, EQT’s and Rice’s plans, objectives, expectations and
intentions, the expected timing of completion of the transaction,
and other statements that are not historical facts. Such statements
are subject to numerous assumptions, risks, and uncertainties.
Statements that do not describe historical or current facts,
including statements about beliefs and expectations, are
forward-looking statements. Forward-looking statements may be
identified by words such as expect, anticipate, believe, intend,
estimate, plan, target, goal, or similar expressions, or future or
conditional verbs such as will, may, might, should, would, could,
or similar variations. The forward-looking statements are intended
to be subject to the safe harbor provided by Section 27A of the
Securities Act of 1933, Section 21E of the Securities Exchange Act
of 1934, and the Private Securities Litigation Reform Act of
1995.
While there is no assurance that any list of risks and
uncertainties or risk factors is complete, below are certain
factors which could cause actual results to differ materially from
those contained or implied in the forward-looking statements
including: risks related to our strategy to develop our Marcellus,
Utica, Upper Devonian and other reserves; changes in our drilling
plans and programs and the availability of capital to complete
these plans and programs; changes in production sales volumes and
growth rates; projected average lateral lengths and drilling
locations; projected unit costs; projected EBITDA of Rice’s
retained midstream assets; risks related to our acquisition and
integration of acquired businesses and assets; the cost of
defending our intellectual property; technological changes and
other trends affecting the oil and gas industry; the possibility
that the proposed transaction does not close when expected or at
all because required regulatory, shareholder or other approvals are
not received or other conditions to the closing are not satisfied
on a timely basis or at all; the risk that the financing required
to fund the transaction is not obtained; potential adverse
reactions or changes to business or employee relationships,
including those resulting from the announcement or completion of
the transaction; uncertainties as to the timing of the transaction;
competitive responses to the transaction; the possibility that the
anticipated benefits of the transaction are not realized when
expected or at all, including as a result of the impact of, or
problems arising from, the integration of the two companies; the
possibility that the transaction may be more expensive to complete
than anticipated, including as a result of unexpected factors or
events; diversion of management’s attention from ongoing business
operations and opportunities; EQT’s ability to complete the
acquisition and integration of Rice successfully; litigation
relating to the transaction; and other factors that may affect
future results of EQT and Rice. Additional factors that could cause
results to differ materially from those described above can be
found in EQT’s Annual Report on Form 10-K for the year ended
December 31, 2016 and in its subsequent Quarterly Report on Form
10-Q for the quarter ended March 31, 2017, each of which is on file
with the Securities and Exchange Commission (the “SEC”) and
available in the “Investors” section of EQT’s website,
https://www.eqt.com/, under the heading “SEC Filings” and in other
documents EQT files with the SEC, and in Rice’s Annual Report on
Form 10-K for the year ended December 31, 2016 and in its
subsequent Quarterly Report on Form 10-Q for the quarter ended
March 31, 2017, each of which is on file with the SEC and available
in the “Investor Relations” section of Rice’s website,
https://www.riceenergy.com/, under the subsection “Financial
Information” and then under the heading “SEC Filings” and in other
documents Rice files with the SEC.
All forward-looking statements speak only as of the date they
are made and are based on information available at that time.
Neither EQT nor Rice assumes any obligation to update
forward-looking statements to reflect circumstances or events that
occur after the date the forward-looking statements were made or to
reflect the occurrence of unanticipated events except as required
by federal securities laws. As forward-looking statements involve
significant risks and uncertainties, caution should be exercised
against placing undue reliance on such statements.
Important Additional Information
In connection with the proposed transaction, EQT will file with
the SEC a Registration Statement on Form S-4 that will include a
Joint Proxy Statement of EQT and Rice and a Prospectus of EQT, as
well as other relevant documents concerning the proposed
transaction. The proposed transaction involving EQT and Rice will
be submitted to EQT’s shareholders and Rice’s stockholders for
their consideration. This communication does not constitute an
offer to sell or the solicitation of an offer to buy any securities
or a solicitation of any vote or approval. SHAREHOLDERS OF EQT AND
STOCKHOLDERS OF RICE ARE URGED TO READ THE REGISTRATION STATEMENT
AND THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE TRANSACTION
WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED
WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE
DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors will be able to obtain a free copy of the definitive
joint proxy statement/prospectus, as well as other filings
containing information about EQT and Rice, without charge, at the
SEC’s website (http://www.sec.gov). Copies of the joint proxy
statement/prospectus and the filings with the SEC that will be
incorporated by reference in the joint proxy statement/prospectus
can also be obtained, without charge, by directing a request to
Investor Relations, EQT Corporation, EQT Plaza, 625 Liberty Avenue,
Pittsburgh, Pennsylvania 15222-3111, Tel. No. (412) 553-5700 or to
Investor Relations, Rice Energy Inc., 2200 Rice Drive, Canonsburg,
Pennsylvania 15317, Tel. No. (724) 271-7200.
Participants in the Solicitation
EQT, Rice, and certain of their respective directors, executive
officers and employees may be deemed to be participants in the
solicitation of proxies in respect of the proposed transaction.
Information regarding EQT’s directors and executive officers is
available in its definitive proxy statement, which was filed with
the SEC on February 17, 2017, and certain of its Current Reports on
Form 8-K. Information regarding Rice’s directors and executive
officers is available in its definitive proxy statement, which was
filed with the SEC on April 17, 2017, and certain of its Current
Reports on Form 8-K. Other information regarding the participants
in the proxy solicitation and a description of their direct and
indirect interests, by security holdings or otherwise, will be
contained in the joint proxy statement/prospectus and other
relevant materials filed with the SEC. Free copies of this document
may be obtained as described in the preceding paragraph.
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version on businesswire.com: http://www.businesswire.com/news/home/20170619005618/en/
EQT analyst inquiries:Patrick Kane, 412-553-7833Chief
Investor Relations Officerpkane@eqt.comorEQT Midstream Partners
/ EQT GP Holdings analyst inquiries:Nate Tetlow,
412-553-5834Investor Relations Directorntetlow@eqt.comorMedia
inquiries:Natalie Cox, 412-395-3941Corporate Director,
Communicationsncox@eqt.comorRice analyst inquiries:Julie
Danvers, 832-708-3437Director of Investor
RelationsJulie.Danvers@RiceEnergy.com
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