EQT has closed a transaction to sell certain non-strategic assets in Pennsylvania and West Virginia to Diversified Gas and Oil Plc for $125 million in cash. The transaction includes potential contingent consideration of up to an additional $20 million, payable based on certain future commodity price targets.
The transaction relieves EQT of approximately $47 million in asset retirement obligations and other liabilities associated with the assets, according to the company. Proceeds from the sale have been used to pay down EQT’s term loan due 2021.
“The closing of this non-strategic asset sale demonstrates our commitment to improving the balance sheet and reducing debt,” president and CEO Toby Rice said in a statement. “These assets sit outside our core focus area and the divestment will enable a heightened focus on our core asset portfolio. Additionally, the transaction relieves EQT of the higher relative operating costs and substantial asset retirement obligations associated with these assets and will improve our financial standing.”
Additional asset details:
- Pennsylvania: Cameron, Clarion, Clearfield, Elk, Indiana, Jefferson, and Tioga Counties
- 80 Marcellus wells with current net production of approximately 50 MMcfe per day
- Leasehold and drilling rights retained on all acreage, excluding Tioga County
- 33 miles of gathering lines
- West Virginia: Doddridge, Harrison, Marion, Monongalia, Ritchie, Taylor, Tyler, and Wetzel Counties
- 809 Conventional wells with current net production of approximately 3 MMcfe per day
- Leasehold and drilling rights retained on all acreage
- 154 miles of gathering lines
Separately, the company also implemented a strategic volume curtailment program affecting 1.4 Bcfe per day of gross production, equivalent to approximately 1.0 Bcfe per day of net production, beginning on May 16. The duration of the curtailment will depend on commodity price movements, relationships and resulting economics, and could potentially continue through the end of the second quarter 2020, the company said in a written statement.
Assuming production remains curtailed at this level through June 30, 2020, the company is expecting its second quarter 2020 total sales volumes to be between 315 – 335 Bcfe, or about 45 Bcfe lower than its previously announced guidance range.
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