EQT to Merge with Equitrans Midstream, Creating Premier Vertically Integrated Natural Gas Company

EQT Corporation ("EQT") (NYSE: EQT) and Equitrans Midstream Corporation ("Equitrans") (NYSE: ETRN) have announced that they have entered into a definitive merger agreement creating a premier vertically integrated natural gas business, with an initial enterprise value over $35 billion, that is well positioned to be a globally competitive American energy leader. The combined company will have a peer-leading cost of supply, durable free cash flow in all price environments, and significant synergy potential.

EQT President and CEO Toby Z. Rice stated, "Equitrans is the most strategic and transformational transaction EQT has ever pursued, and we see this as a once in a lifetime opportunity to vertically integrate one of the highest quality natural gas resource bases anywhere in the world. As we enter the global era of natural gas, it is imperative for U.S. natural gas companies to evolve their business models to compete on the global stage against vertically integrated rivals. We have identified multiple, high confidence near-term synergies, with significant upside from future infrastructure optimization projects that we believe will drive material value creation for shareholders over time. Our modern, data-driven operating model, first-hand knowledge of Equitrans' operations and successful track record integrating $9 billion of acquisitions, all of which included midstream assets, gives me tremendous confidence in EQT's ability to seamlessly combine the two companies and capture synergies."

"This strategic transaction with EQT is the culmination of an exhaustive process conducted by the ETRN board to determine the best strategic path forward for our shareholders, employees, and stakeholders," said Thomas F. Karam, Executive Chairman, Equitrans Midstream. "Combining with EQT creates a premier vertically integrated natural gas business that is a game changer for the natural gas industry and Appalachian Basin. The transaction delivers full and fair value to ETRN shareholders and provides the opportunity to participate in future value growth as EQT executes on its strategy. We are proud of our employees who have worked hard to build one of the leading midstream companies in the Appalachian Basin. And we are excited for the future with EQT."

Compelling Strategic and Financial Benefits

• Creates America's first large-scale, integrated natural gas producer with an unrivaled low-cost structure that provides investors with the best risk-adjusted exposure to natural gas prices
• Provides >2,000 miles of irreplaceable pipeline infrastructure with extensive overlap and connectivity in EQT's core area of operations
• Combined company will have 27.6 Tcfe of proved reserves across ~1.9 million net acres with 6.3 Bcfe/d of net production and >8.0 Bcfe/d of gathering throughput across >3,000 miles of pipeline
• Provides pathway to reduce EQT's long-term corporate free cash flow breakeven(1) to less than $2 per MMBtu, ensuring robust free cash flow generation through all parts of the commodity cycle
• Unlocks upside to gas price volatility as pro forma cost structure reduces hedging requirements, positioning EQT shareholders for unmatched price upside
• Cost structure integration materially improves economics of EQT's remaining ~4,000 drilling locations, unlocking industry leading terminal value
• Mitigates operational execution risk with ~90% of operated production flowing through EQT-owned midstream assets on a pro forma basis
• Significantly accretive to free cash flow per share; projected pro forma 2025 to 2029 cumulative free cash flow(1) generation of approximately $16 billion at recent strip prices

Unlocks Meaningful Value

• Symbiotic nature of the assets is expected to drive $250 million of annual synergies
• Financial and corporate costs: ~$120 million per year
• Uptime and production optimization: ~$75 million per year
• Capital and operating costs: ~$55 million per year
• Identified upside pathway to $175 million of additional per annum synergies from optimization of system pressures, integration of water networks, and execution of expansion projects
• Integration of contractual volume commitments eliminates $11+ billion of future liabilities, well in excess of assumed debt
• Identified low risk path to more than $5.0 billion of near-term debt repayment via $3.5 billion of asset sales and organic free cash flow
• Long-term debt target of $7.5 billion
• Unwavering commitment to investment grade credit ratings with full vetting of pro forma balance sheet by all three credit rating agencies

(1) A non-GAAP financial measure. See the Non-GAAP Disclosures section of this news release for the definition of, and other important information regarding, this non-GAAP financial measure. Free cash flow breakeven is defined as the average Henry Hub price needed to generate positive free cash flow.

Transaction Details

Under the terms of the merger agreement, unanimously approved by the Boards of both companies, EQT will acquire Equitrans in an all-stock transaction. Each outstanding share of Equitrans common stock will be exchanged for 0.3504 shares of EQT common stock, representing an implied value of $12.50 per Equitrans share based on the volume weighted average price of EQT common stock for the 30 days ending on March 8, 2024. As a result of the transaction, EQT's existing shareholders are expected to own approximately 74% of the combined company and Equitrans' shareholders are expected to own approximately 26%. 

The transaction is expected to close during the fourth quarter of 2024, subject to required regulatory approvals and clearances, approval of the transaction by shareholders of both EQT and Equitrans, and other customary closing conditions. The transaction closing is contingent on FERC authorizing MVP to commence service. Upon the closing of the transaction, three representatives from Equitrans will join EQT's Board of Directors. EQT's executive management team will lead the combined company with headquarters remaining in Pittsburgh, Pennsylvania.

About EQT Corporation

EQT Corporation is a leading independent natural gas production company with operations focused in the Appalachian Basin. We are dedicated to responsibly developing our world-class asset base and being the operator of choice for our stakeholders. By leveraging a culture that prioritizes operational efficiency, technology and sustainability, we seek to continuously improve the way we produce environmentally responsible, reliable and low-cost energy. We have a longstanding commitment to the safety of our employees, contractors, and communities, and to the reduction of our overall environmental footprint. Our values are evident in the way we operate and in how we interact each day – trust, teamwork, heart, and evolution are at the center of all we do. EQT Management speaks to investors from time to time and the analyst presentation for these discussions, which is updated periodically, is available via EQT's investor relations website at ir.eqt.com.

About Equitrans Midstream Corporation

Equitrans Midstream Corporation has a premier asset footprint in the Appalachian Basin and, as the parent company of EQM Midstream Partners, is one of the largest natural gas gatherers in the United States. Through its strategically located infrastructure assets in the Marcellus and Utica regions, Equitrans has an operational focus on gas transmission and storage systems, gas gathering systems, and water services that support natural gas development and production across the Basin. With a rich 140-year history in the energy industry, Equitrans was launched as a standalone company in 2018 with a vision to be the premier midstream services provider in North America. While working to meet America's growing need for clean-burning energy, Equitrans is proud of its environmental, social, and governance (ESG) practices, striving every day to preserve and protect the environment, provide an engaging workplace for its employees, support and enrich its local communities, and to deliver sustained value for customers and shareholders. To learn more, visit www.equitransmidstream.com.