EQT Corp. said Friday that it would sell its formidable 2.5 million net acre position in the Huron formation in Kentucky, Virginia and southern West Virginia for $575 million, parting with an early asset that helped give rise to the nation’s largest natural gas producer before it transitioned to more complex and prolific unconventional operations in the Appalachian Basin.
Diversified Gas & Oil plc, which announced its intent to buy the assets in mid-June without disclosing specifics, is the buyer. EQT said it would retain the deep drilling rights for targets like the Rogersville Shale in Kentucky.
The package includes 12,000 wells, current production of 200 MMcfe/d, 1.6 Tcfe of proved developed reserves, 6,400 miles of low-pressure gathering lines and 59 compression stations. Diversified, an Appalachia-focused exploration and production company, would also takeover eight field locations and offer jobs to 250 employees who support the Huron operations.
EQT, which became the leading gas producer after acquiring Rice Energy Inc. last year, currently produces about 4 Bcfe/d. The deal to sell the Huron assets comes just weeks after the company acknowledged in a regulatory filing that it was marketing them. EQT also sold noncore Permian Basin assets earlier this year for $64 million.
EQT operations in the Huron have been sporadic in recent years. At one time, when EQT was both a producer and a natural gas utility, the Huron made up the bulk of its assets. EQT said it would update this year’s guidance when it releases 2Q2018 earnings results on July 26.
Diversified, which trades on AIM, an international submarket of the London Stock Exchange, would bolster its Appalachian position to 6.5 million net acres when the Huron acquisition closes in late July. It’s focused on acquiring and enhancing conventional assets.
Under AIM rules, the deal constituted a reverse takeover and was subject to shareholder approval. As a result, trading of the company’s stock was suspended until the deal was canceled or finalized. With a definitive agreement signed, Diversified published an admission document on Friday and trading has resumed.