With $2.2 billion of cash to spend, EQT Corp. (NYSE: EQT) said Oct. 25 it picked up a few things in the Marcellus Shale in deals that add 59,600 net acres and hundreds of locations to its portfolio.

The bulk of the acreage, located in West Virginia and Pennsylvania, comes from Trans Energy (OTC: TENG) and affiliates of private E&P Republic Energy and other parties.

The deals may be in response to Rice Energy Inc.’s (NYSE: RICE) $2.7 billion purchase of Greene County, Pa., acreage from Vantage Energy LLC.

“EQT is answering investors' concerns on inventory after Rice's acquisition of Vantage Energy,” said Charles Robertson II, an analyst at Cowen and Co.

In September, Robertson said EQT investors overreacted to the company not purchasing Vantage, arguing that EQT had already expanded with its $407 million purchase of Statoil ASA’s (NYSE: STO) Marcellus and Utica acreage.

RELATED: EQT Buys Next-Door Neighbor Statoil’s Marcellus Acreage

EQT’s newly acquired acreage produces 44 million cubic feet equivalent per day (MMcfe/d) of natural gas. Trans Energy and Republic’s acreage includes 42 wells, 33 of which are producing.

Much of the acreage is contiguous with EQT’s existing acreage, and lateral lengths can be more than doubled to 6,000 ft, the company said.

The Trans Energy and Republic acreage includes drilling rights on an estimated 29,000 deep Utica acres.

EQT’s deal includes about 55,800 that are undeveloped. EQT is purchasing that acreage for about $9,400/acre, adjusted for proved developed producing value, Scott Hanold, an analyst at RBC Capital Markets LLC, said in an Oct. 25 report.

“The price paid is reasonable and compares favorably to recent transactions in the region,” Hanold said.

Marcellus transactions in 2016 include:

  • September: Rice buys 85,000 net acres for $2.7 billion, or $13,500/acre;
  • June: Antero Resources buys 55,000 net acres for $450 million, or $7,500/acre; and
  • May: EQT buys 62,500 net acres for $407 million, or $4,500/acre.

EQT said that its consolidation strategy in 2016 increased its core Marcellus position by 143,000 acres, or 55%, to 400,000 acres, including the Oct. 25 acquisitions. The company estimates it has 3,680 undeveloped core Marcellus well locations.

As part of the acquisition, EQT will merge with Trans Energy by acquiring all of Trans Energy’s outstanding common shares for $3.58 per share in cash. At closing, Trans Energy will become a wholly owned subsidiary of EQT.

The transactions are expected to close by the end of the year.

Darren Barbee can be reached at dbarbee@hartenergy.com.

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