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EQT and Equinor Swap Marcellus and Utica Shale, Strengthen Appalachian Onshore Assets in the US

Equinor and EQT Corporation have agreed that Equinor will exchange its operated assets in the Marcellus and Utica shale formations in Ohio for a stake in EQT’s non-operated interests in the Northern Marcellus formation.

The assets EQT in this transaction include:

Approximately 26,000 net acres in Monroe County, Ohio, with an expected net production in 2025 of about 135 million cubic feet per day (MMcfd). These acres are directly adjacent to areas where EQT already operates.
Around 10,000 net acres in Lycoming County, Pennsylvania, where the anticipated net production in 2025 is roughly 15 MMcfd, complementing existing EQT-operated assets.
An additional 16.25% ownership stake in EQT-operated gathering systems that service the core-operated acreage in Lycoming County, Pennsylvania.
A gas buy-back agreement in which Equinor will purchase gas from EQT at a premium to the typical pricing in the basin, extending through the first quarter of 2028.

Specifically, Equinor will relinquish 100% interest and operatorship of its onshore assets in the Appalachian Basin, located in southeastern Ohio. In return, it will acquire 40% of EQT's non-operated working interest in the Northern Marcellus shale formation in Pennsylvania.

Additionally, Equinor will pay EQT $500 million in cash to balance the transaction. This swap aims to enhance cash flows and reduce CO2 emissions intensity within Equinor's international portfolio.

After this deal, Equinor's average working interest will increase from 15.7% to 25.7% in certain gas units in the Northern Marcellus, operated by Chesapeake. To fulfill existing gas sales agreements, Equinor will also enter into a gas buy-back agreement with EQT.

“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. These assets are well-positioned to leverage anticipated positive developments in the US gas market. The proposed swap improves portfolio robustness with an expected reduction in well break-evens and upstream carbon intensity. This also means that we have now fully exited all operated positions onshore US.”

Philippe Mathieu, executive vice president for Exploration and Production International at Equinor

Recent Pipeline Expansion and LNG Deals

In March, EQT announced it is merging with Equitrans, its previous midstream unit, in a deal worth $5.45 billion. This merger will form the only large-scale, vertically integrated natural gas company in the U.S., aiming to compete internationally. This strategy is similar to Chesapeake Energy's reasoning for its $7.4 billion merger with Southwestern Energy in January. EQT mentioned that the new company's total value would be over $35 billion once the merger is complete.

The new entity will have substantial resources, boasting 27.6 trillion cubic feet equivalent (Tcfe) of proven reserves spread over about 1.9 million net acres. It will produce 6.3 billion cubic feet equivalent per day (Bcfe/d) and handle more than 8 Bcfe/d of gathering throughput across 3,000 miles of pipeline. With these capabilities, EQT will be the largest natural gas producer in the U.S.

In response to a worldwide oversupply of natural gas, EQT is scaling back its output significantly, planning to cut nearly 1 billion cubic feet per day of natural gas production this month. This step is part of a wider industry trend where companies are reducing production and drilling to adapt to the market's current demands.

The acquisition of Equitrans Midstream will allow EQT to better manage its pipeline and processing costs, which is crucial as the company looks to profit from exporting LNG globally, taking advantage of potentially higher prices in other markets.

An important benefit of this deal is the addition of over 2,000 miles of pipelines to EQT’s assets, boosting its ability to produce and transport natural gas efficiently. Jeremy Knop, the finance chief at EQT, stressed the importance of maintaining low operational costs to stay competitive.

EQT has also established preliminary deals with LNG companies like Commonwealth LNG, Glenfarne Energy Transition, and Energy Transfer. These partnerships are strategic steps toward securing access to international markets, highlighting EQT's commitment to diversifying its income sources and growing its global presence in the LNG market.

Equitrans Midstream, now part of EQT, is the main partner and operator of the Mountain Valley natural gas pipeline. Despite some regulatory and legal issues since it started in 2018, this pipeline is strategically important, especially given its location in the U.S. Northeast.

About Equinor

Since 2020, Equinor has earned $11 billion from its operations in the U.S. Before this latest deal, the company's position in the Appalachian basin was its last remaining operatorship in the onshore U.S.

Equinor is a global energy company with roots in Norway. Formerly known as Statoil, the company has 20,000 dedicated employees working across more than 30 countries. Equinor is not only the leading operator in Norway but also one of the largest offshore operators worldwide and is increasingly making its mark in the renewable energy sector.

About EQT Corporation

EQT Corporation is the United States' largest natural gas producer, with its operations primarily located in Pennsylvania, West Virginia, and Ohio. As a leading independent natural gas production company, EQT is focused on developing its substantial asset base in the Appalachian Basin. The company is committed to being the preferred operator for its stakeholders and is known for its focus on operational efficiency, technological advancement, and sustainability.

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Appalachian Basin (formerly Marcellus and Utica) covers most of New York, Pennsylvania, Eastern Ohio, West Virginia, and Western Maryland in the north, reaching down to parts of Northwest Georgia and Northeast Alabama in the south. The basin is massive, covering about 185,000 square miles, roughly 1,000 miles long from northeast to southwest, and in some places, it's up to 300 miles wide. In this area, some major companies are making significant investments. EQT stands out as the largest producer in the Appalachian Basin, with other key players including Chesapeake, Range Resources, Antero, Repsol, and Gulfport also actively investing.

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