After an extended period of depressed oil and gas prices, energy companies EQT Corp. (EQT, Financial) and Rice Energy Inc. (RICE, Financial) announced June 19 they have agreed to merge.
Under the terms of the deal, EQT will buy all of Rice’s outstanding shares for $6.7 billion and assume $1.5 billion in net debt and preferred equity. Rice shareholders will receive 0.37 shares of EQT stock and $5.30 per share in cash.
Joining the two Pennsylvania-based companies will create a shale gas drilling giant, making EQT the largest natural gas producer in the U.S. With both companies operating in the Appalachian Basin, EQT President and CEO Steve Schlotterbeck said the deal “brings together two of the top Marcellus and Utica producers to form a natural gas operating position that will be unmatched in the industry.”
Daniel J. Rice IV, CEO of Rice Energy, added the deal will not only benefit shareholders, but the environment as well, saying “Natural gas is the key to a cleaner energy world.”
After the announcement, Rice shares climbed 29% to $25.37 in premarket trading while EQT fell 5.6% to $55.48.
Among the gurus invested in Rice, Andreas Halvorsen (Trades, Portfolio) has the largest position with 8.6% of outstanding shares. Seven other gurus also own the stock.
EQT’s largest guru shareholder is NWQ Managers (Trades, Portfolio) with 1.02% of outstanding shares. A total of 10 other gurus also hold shares.
Following regulatory and shareholder approval, the deal is expected to close in the fourth quarter of this year.
Disclosure: I do not own any stocks mentioned in the article.
