EQT Gears Up For Huron Play Acres' Divestment To Reduce Debt
Zacks Investment Research | Jun 29, 2018 02:58AM ET
EQT Corporation (NYSE:EQT) recently agreed to divest around 2.5 million non-core Huron Play acres for $575 million, to Diversified Gas and Oil Plc. The net acres are located in Southern Appalachia. The transaction is expected to conclude in July 2018.
Divestment Package
The all-cash deal enabled the company to sell net acreages in Kentucky, Virginia, and southern West Virginia. In the last reported quarter, net production from around 12,000 wells in the area came in about 200 million cubic feet of gas equivalent per day. Per the company, the assets consist of net proved developed reserves of 1.6 trillion cubic feet of gas equivalent. Around 250 employees, currently working at the site, will be transferred to Diversified Gas and Oil.
The financial and operational guidance for 2018 will be revised as a result of the divestment, which the company plans to disclose in the April-June earnings report that is slated to be announced on Jul 26.
Divestment Rationale
Liability Reliever: The transaction enables the company to get rid of the liabilities related to the properties, which includes around $200 million plugging costs. Moreover, per the deal, the properties’ deep drilling rights will stay with EQT Corporation.
Debt Reduction: The deal is expected to help the company reduce debt burden, which surged in the last two reported quarters primarily due to the $6.7-billion Rice Energy acquisition . At the end of the first quarter of 2018, EQT Corporation had a long-term debt of $7,457 million.
Price Performance
Pittsburgh, PA-based EQT Corp. has lost 4.7% in the past year against the 21.7% rise of its industry .
Zacks Rank and Stocks to Consider
Currently, EQT Corp. has a Zacks Rank #3 (Hold). Investors interested in the energy sector can opt for better-ranked stocks like Continental Resources, Inc. (NYSE:CLR) , Delek US Holdings, Inc. (NYSE:DK) and HollyFrontier Corp. (NYSE:HFC) , each sporting a Zacks Rank #1 (Strong Buy). You can see .
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