Pittsburgh-based EQT Corp on Tuesday September 6 announced its intentions to acquire Tug Hill and pipeline company XcL Midstream in West Virginia along with its operations for $5.2 Billion. If the deal goes as planned, the founder and CEO of Tug Hill and XcL Midstream, Wil VanLoh, will be joining EQT's board of directors.
Speaking with an analyst, EQT's CEO Toby Rice agrees that Tug Hill is the largest and the best performing private operator in southern Appalachia. The successful acquisition of these two companies will increase EQT's exposure to natural gas liquids and add pipeline capacity to its arsenal. The organization will increase its daily gas volumes by about 15%.
Also, XcL Midstream has 97 miles of pipelines connected to eight interstate pipelines. EQT's acquisition of XcL Midstream will expand EQT's access to markets both in and outside Appalachia. EQT will have the advantage of trading in areas where gas trades at a discount to the Henry Hub in Louisiana's set price.
The EQT's CEO already has future plans for the organization. He plans to increase natural gas exports by constructing new pipelines and liquified natural gas facilities. Toby Rice believes his project will be successful since EQT will access more pipelines, allowing the company to access more markets, including LNG markets.
The acquisition payment will be split into two, $2.6 billion cash and 55 million shares of EQT stock. EQT's previous similar acquisition was about a year ago when the company acquired Alta Resources for $2.9 billion. Also, the company has announced its board's approval of expanding its share buyback program to $2 billion.