EQT Energy (EQT.US) has agreed to acquire Range Resources Corp. in an all-stock transaction that values the combined company at over $50 billion.
The deal will create the largest natural gas producer in the United States, with daily output exceeding 9 billion cubic feet equivalent.
EQT expects to achieve $325 million in annual cost savings within two years.
Under the terms of the agreement, Range shareholders will receive 0.987 shares of EQT stock for each share they hold, and will own approximately 27% of the combined company after the transaction closes.
The deal is expected to be completed in the first quarter of 2027, subject to shareholder and regulatory approvals.
Based on Range's approximately 233.7 million outstanding shares, the transaction consideration is approximately $12.83 billion, implying a per-share offer of $54.91, representing a premium of about 20.6% over Range's closing price last Friday.
The core rationale behind this deal is not about "buying production," but rather about merging two assets located in the Appalachian Basin into a single, lower cost curve.
Following the merger, the company will control nearly 3 million net acres in the Appalachian Basin, with net production exceeding 9 billion cubic feet equivalent per day, more than 30 years of drilling inventory, and approximately 3,700 miles of midstream infrastructure.
EQT expects to realize approximately $325 million in annual base synergies within two years through corporate-level, operational, and marketing efficiencies, with the potential to exceed $600 million over the long term; cumulative free cash flow over the next five years at current prices is estimated at approximately $20 billion.
More significantly, the breakeven point is moving lower.
EQT stated that the transaction pushes its unlevered free cash flow breakeven point below $2 per million British thermal units, while enhancing the diversification of natural gas liquids (NGLs), enabling the company to maintain free cash flow resilience across all stages of the commodity price cycle.
For a pure-play natural gas producer, a breakeven point below $2 per million British thermal units means it retains the financial capacity to sustain dividends and buybacks even if Henry Hub prices fall to recent lows.
This serves as both a defensive barrier and a signal of pricing power from an industry consolidator to the market.
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