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How Does EQT Corporation Benefit from the Rice Acquisition?

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EQT-RICE synergies

EQT Corporation (EQT) believes that, following the Rice acquisition, capital efficiencies brought about by drilling longer laterals and lower costs would result in economic savings with a present value (or PV) of $1.9 billion.

General and administrative (G&A) expenses are expected to see a reduction at least for the next ten years, resulting in economic savings of PV $0.6 billion.

Total “base synergies” as a result of the Rice acquisition are expected to result in economic savings of $2.5 billion.

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In a press release, EQT management commented about the “strategic and operational fit of the Rice acquisition” and noted, “EQT is now one of the lowest-cost producers in the United States, possessing significant financial flexibility and an anticipated investment-grade credit rating.” Stating that the company expects to start delivering on these synergies from day one, EQT management added, “As a stronger, more profitable company, we are excited about the unique value creation opportunities available for EQT.”

Apart from these “base synergies,” EQT also expects to realize “upside synergies,” which we’ll discuss in the next part of this series.

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