Natural gas producer EQT Corp. has signed an agreement to buy back its former unit Equitrans Midstream in a roughly $5.5 billion all-stock deal, The Wall Street Journal reported on March 11.

The combined company is expected to be valued at more than $35 billion, including debt, the report said.

The deal is expected to be announced later on March 11, the report said, citing people familiar with the matter.

Both the companies did not immediately respond to a Reuters request for comment.

Shares of Equitrans jumped more than 8% in premarket trading, while EQT was down about 1%.

The deal comes at a time when U.S. natural gas producers are curbing their output and spending on drilling activity as an oversupplied market has brought the prices of the commodity down to multi-decade lows.

The transaction closely follows rival Chesapeake Energy's $7.4 billion bid for Southwestern Energy  in January.

In 2018, EQT split into two, separating its midstream operations from the gas production business.

The largest U.S. natural gas producer has operations focused in the cores of the Marcellus and Utica shales in the Appalachian Basin.

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