Equinor, EQT in Appalachian asset swap
Norway’s Equinor and EQT, one of the largest natural gas producers in the US, said April 15 they had entered into an agreement to swap various assets in the Appalachian Basin.
Under the transaction agreement, Equinor will sell a 100% interest and operatorship of its Appalachian asset in southeastern Ohio in exchange for 40% of EQT’s non-operated working interest in the northern Marcellus shale formation of Pennsylvania.
EQT said the Pennsylvania assets represent about 225mn ft3/day of forecast 2025 net production.
EQT will receive from Equinor 26,000 net acres in Ohio representing about 135mn ft3/day of 2025 production, 10,000 net acres in Pennsylvania representing 15mn ft3/day of 2025 net production and the remaining 16.25% interest in an EQT-operated gathering system servicing core operated acreage in Pennsylvania.
To balance the transaction, Equinor will pay $500mn in cash to EQT and enter into a gas buyback agreement with EQT at a premium to in-basin pricing through Q1 2028.
“This transaction marks an extremely positive start to our divestiture program, bringing in over $1.1bn of value, including synergies and development plan optimisation, for 40% of our non-operated assets, while retaining gas price upside,” EQT CEO Toby Rice said. “We plan to opportunistically divest the remaining portion of our non-operated assets in Northeast Pennsylvania and have tremendous confidence in being able to achieve our de-leveraging goals.”
Following the transaction, Equinor’s interest in certain Northern Marcellus units operated by Chesapeake Energy will increase to 25.7% from 15.7%.
“With this transaction, we continue to high-grade the US portfolio and improve profitability by strengthening our gas position in the most robust part of the Appalachian Basin,” said Philippe Mathieu, Equinor’s executive vice president for Exploration and Production International. “The proposed swap improves portfolio robustness with an expected reduction in well break-evens and upstream carbon intensity.”
The swap also completes Equinor’s exit from all operated positions in the US onshore, he added.
The transaction remains subject to customary closing adjustments and required regulatory approvals and clearances and is expected to close in late Q2 2024.