Equinor exits operated positions onshore US through asset swap with EQT

Equinor USA Onshore Properties Inc., along with certain affiliates, and EQT Corp. have agreed to swap Equinor’s operated position in the Marcellus and Utica shale formations in Ohio for a stake in EQT’s non-operated natural gas assets in the Northern Marcellus formation.

The deal is meant to strengthen Equinor’s gas position “in the most robust part of the Appalachian basin” with assets that are “well positioned to leverage anticipated positive developments in the US gas market,” said Philippe Mathieu, executive vice-president for exploration and production international at Equinor. 

With the deal, Equinor will have fully exited all operated positions onshore US, Mathieu continued in an Apr. 15 release. 

Under the transaction agreement, Equinor will sell 100% interest in and operatorship of its onshore asset in the Appalachian basin in southeastern Ohio in exchange for 40% of EQT’s non-operated working interest in the Northern Marcellus shale formation in Pennsylvania.

Equinor will pay a cash consideration of $500 million to EQT to balance the overall transaction.

Following the transaction, Equinor will increase its average working interest to 25.7% from 15.7% in certain Chesapeake-operated Northern Marcellus gas units. 

The 40% interest EQT will sell represents about 225 MMcfd of forecasted 2025 net production.  The assets EQT is receiving in the transaction consist of:

• 26,000 net acres in Monroe County, Ohio, with 2025E net production of 135 MMcfed directly offsetting EQT-operated acreage.
• 10,000 net acres in Lycoming County, Pa. , with 2025E net production of 15 MMcfed in existing EQT-operated assets.
• The remaining 16.25% ownership in EQT-operated gathering systems servicing core operated acreage in Lycoming County, Pa.
• A gas buy-back agreement whereby Equinor will purchase gas from EQT at a premium to in-basin pricing through first-quarter 2028.

EQT plans to divest the remaining portion of its non-operated assets in Northeast Pennsylvania, said Toby Rice, EQT president and chief executive officer, in a separate release. 

The transaction is subject to customary closing adjustments, required regulatory approvals and clearances, and is expected to close in late second-quarter 2024.