EQT will acquire Range Resources in an all-stock deal valued at around $13 billion. The combination would form the largest natural gas company in the U.S. The Motley Fool's Geoffrey Seiler argues shared Appalachian assets should deliver solid synergies.
EQT will acquire Range Resources in an all-stock deal valued at around $13 billion, forming a company with a combined enterprise value exceeding $50 billion. Range shareholders will receive 0.987 EQT shares and own roughly 27% of the combined company.
The deal is expected to close in the first quarter of 2027. However, shareholders of both companies must still approve it, and it must pass regulatory approval.
Two Appalachian leaders combine
EQT and Range are the two leading natural gas producers in the Appalachian region, covering the Marcellus and Utica Shales, according to Seiler. Together they would have over 9 Bcfe/d of net production, of which 88% is natural gas.
Range's liquids-rich assets add flexibility. The combined company could shift activity between liquids-rich and dry gas, depending on the pricing environment and its hedges.
Savings targets and balance sheet
EQT expects to save $325 million in annual corporate and operational costs through reduced corporate overhead, lower lease operating expenses and lower capital costs. It is also looking to save more than $300 million a year from post-production activities, including midstream and marketing optimization.
Seiler writes that both companies have strong balance sheets, and that the all-stock structure means that will continue. The combined company is expected to have 0.6 times leverage at the end of 2027.
Seiler sees demand support, with a deal risk
Seiler points to AI infrastructure build-out, population growth and strong overseas LNG demand as drivers of booming natural gas demand. He notes that EQT stock trades at a roughly 11% free-cash-flow yield.
He adds that investors can buy Range instead of EQT before the merger, although there is a risk if the deal does fall apart.
Source: The Motley Fool
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