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EQT Accretive $2.9 Billion Alta Acquisition, Continues O&G Consolidation Trend

May 06, 2021 5:28 PM ETEQT Corporation (EQT)31 Comments
Josh Young profile picture
Josh Young


  • EQT buys Alta for 2.9 billion.
  • Market reacts negatively.
  • Strategic and accretive deal that will garner a more positive response over time.

Merging Workflow Infographic
Photo by filo/DigitalVision Vectors via Getty Images

EQT Acquires Alta Resources for 2.9 Billion in Cash and Equity, Adding 1Bcf/d of Natural Gas Production

On May 6, 2021, EQT Corporation (NYSE:EQT) announced its agreement to acquire Blackstone-backed Alta

This article was written by

Josh Young profile picture
Josh Young is the Chief Investment Officer of Bison Interests, an investment firm focused on publicly traded oil and gas companies. And he is the former Chairman of the Board of Iron Bridge Resources, which sold to Warburg Pincus and CPPIB backed Velvet Energy in 2018 for $142 million. He is a value investor primarily focused on energy stocks, natural resources stocks, and companies trading at low multiples to earnings, cash flow, or book value. He has presented at numerous investment conferences, including Platts, LD Micro, Oil & Gas Money, Louisiana Energy Conference, and the Global Resources Investment Conference and has been featured in media including Barrons, Bloomberg, Business Insider, Fox Business News, RT and Oil & Gas Investor Magazine. He is a graduate with honors from the University of Chicago in economics.

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Comments (31)

EQT is up 7% as we speak on a rather flat day topping my watchlist. The Market is not sure...
Do you think EQT has enough torque in rising NG environment given their large size and mostly hedged book?
Josh Young profile picture
@Albert Food not sure. I just know this was an accretive deal vs their pre-deal valuation
MapMan LXII profile picture
The Rice Brothers are on a buying spree but still have yet to turn a profitable quarter with their existing Rice/EQT/Chevron properties. Buying another operator may increase cash flow but there are no operating synergies to save $$
River18 profile picture
Nice article. Haven't owned EQT in ages.
If people look at that third image above, note the blue at the confluence of Bradford, Wyoming, and Sullivan counties.
That is arguably the best shale gas rock on the planet.
(EQT actually included an EUR curve comparing those wells with Cabot's famous, nearby Susquehanna wells).

Alta has been a non operator with Chesapeake for ~70, 000 acres of production coming from that acreage.
The verifiable output (Chessy's monthly production data) is easily amongst the best shale gas well producers in the world.
EQT will NOT be actively involved in operating these wells, merely collaborating and paying a portion of the cost ... and receiving a comparable portion of the revenues.

The next county to the left - Lycoming - has a lot of strongly producing Alta wells for which Alta owns - not leases - the mineral rights.
They claim to need drill/complete only ~15 wells per year in NEPA to maintain ~400 million cfd output.
This deal is fantastic for EQT.
@phaedrus1952 I believe the market substantially undervalues owned, or fee minerals (as opposed to leased) minerals. So many advantages for the owner. Good, no actuallygreat, acquisition.
"Accretive" is just I-banker talk to sound fancy and try to push deals. What I care about is NPV.

Mr. Market thinks the deal was -4% of EQT market cap in NPV. Negative NPV, not positive. Bad.

There are no lease-line synergies. No operating synergies. Not even much market concentration, given NEPA and SWPA are pretty disconnected.
217 ... Now now, Kno knee, I originally thought that EQT may have paid a somewhat surprising 'fair market value' (or above) for Alta until I went through their 'Transformative Presentation' slides this morning.
Strongly recommend that you do likewise.

Know all those eye popping wells that Chessy has been producing out of NEPA the past 24 months?
Turns out that Alta has been a non op in about 80,000 acres of it. (85% non op acreage is in collaboration with Chesapeake).
This is where the 'extra' half billion cubic feet a day production comes from ... atop Lycoming county's mineral-rights-owned ~400 Bcfd which the privately-owned Alta has publicly posted monthly.

Once again, Toby and the gang just hit a Grand slam home run.

It's premium land, no doubt. But it was a marketed transaction (I-banker auction). So they paid the most. I question that a bit, given the lack of synergies.
Raw Energy profile picture
@21793061 @phaedrus1952 - Despite all the nice rhetoric and pretty slides, I have yet to see an estimate of the transaction values based on proved reserves, midstream and acreage, broken out. Knowing that mgts can always find metrics that are "accretive," I conclude from this that Alta's proved reserves are not accretive to EQT's; proved reserve stats are almost always cited first in disclsoures. Also, because Alta has more recent wells (it only acquired the assets in 2017 from APC for $1.2 B), they likely have a higher decline than EQT's in the initial years after the acquisition. Beating out $CHK likely required a very aggressive # and a greater % of stock in the consideration.
csaller profile picture
@Josh Young thanks for the article. Any other reason you don't like EQT (because you're not long)? Or is it just that there are other nat gas plays you think are better risk/reward?
Josh Young profile picture
@csaller there are better risk rewards out there I think
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