EQT Corp., the nation’s largest natural gas producer, is swapping some Pennsylvania holdings in the Marcellus Shale in an exchange with Norway’s Equinor ASA, which is handing off its operations in Ohio and paying $500 million to balance the overall transaction.
The agreement with Equinor USA Onshore Properties Inc. and affiliates includes 100% of its stakes and ownership in Ohio’s Marcellus and Utica shales. The deal would allow the integrated major to completely exit all operated positions in the Lower 48.
In exchange, EQT is selling an “undivided” 40% interest in nonoperated natural gas assets in northeastern Pennsylvania. The leasehold represents about 225 MMcf/d net of forecast 2025 production, the Pittsburgh-based independent said.
"This transaction marks an extremely positive start to our divestiture program, bringing in over $1.1 billion of value, including synergies and development plan optimization, for 40% of our nonoperated assets, while retaining gas price upside,” EQT CEO Toby Z. Rice said.
“We plan to opportunistically divest the remaining portion of our nonoperated assets in Northeast Pennsylvania and have tremendous confidence in being able to achieve our deleveraging goals."
The transaction is expected to close by the end of June.
During the fourth quarter call, management had said it was entertaining the sale of nonoperated assets, particularly to international companies looking for exposure to U.S. natural gas.
With the Equinor transaction, EQT would secure:
- 26,000 net acres in Monroe County, OH, with estimated year-end 2025 (2025e) output of 135 MMcfe/d net that offsets operated acreage;
- 10,000 net acres in Lycoming County, PA, with 2025e net output of 15 MMcfe/d in existing operated assets;
- Remaining 16.25% ownership in EQT-operated gathering systems in Lycoming County; and
- A buyback agreement,whereby Equinor would purchase natural gas from EQT at a “premium to in-basin pricing” through 1Q2028.
Based on recent strip pricing, EQT is forecasting aggregate 2025 free cash flow of $75 million from the Equinor trade.
EQT has been shoring up its natural gas advantage in the Lower 48. Last month it agreed to buy the former entity Equitrans Midstream Corp. The deal would hold 27.6 Tcfe of proved reserves across nearly two million net acres. Net production would be around 6.3 Bcfe/d net, with 8 Bcfe/d-plus of gathering throughput across 3,000-plus miles of pipeline.
To capture more price upside, EQT has curtailed gas output, with the shut ins through March estimated at up to 40 Bcf.
Lower production overall in recent weeks has helped to provide a floor for New York Mercantile Exchange natural gas futures prices. Soft spring season demand and weakness in cash markets, though, have kept the front month consistently below the $2.00/MMBtu level. NGI’s Spot Gas National Avg. closed out last week at 94.5 cents, its lowest point of the year so far.
Through the transaction, Equinor’s average working interest in some Chesapeake Energy Corp.-operated Marcellus natural gas units is set to increase to 25.7%, or about 10% higher.
The Appalachian Basin has been the last remaining operatorship held by Equinor in the U.S. onshore. The trade allows the integrated major to “high grade the U.S. portfolio and improve profitability by strengthening our gas position in the most robust part of the Appalachian Basin,” Executive Vice President Philippe Mathieu said. He oversees the Exploration and Production International business unit.
“These assets are well positioned to leverage anticipated positive developments in the U.S. gas market,” Mathieu said. “The proposed swap improves portfolio robustness with an expected reduction in well breakevens and upstream carbon intensity. This also means that we have now fully exited all operated positions onshore U.S.” Mathieu said the United States remains “a core area for Equinor, where we’re building a broad energy business within offshore and onshore oil and gas, offshore wind and new low-carbon value chains.”
