EQT to buy Range Resources in $50 billion natural gas deal

EQT Corp said on Monday, October 26, that it will acquire Range Resources in an all-stock natural gas deal valued at more than $50 billion including debt. The companies said the combination will create the largest vertically integrated natural gas producer in the United States. Range Resources shareholders will receive 0.987 EQT shares for each share they hold. Reuters calculated the equity value at about $12.83 billion, based on 233.68 million Range Resources shares outstanding and data from LSEG. The implied offer price of $54.91 per share was about 20.6 percent above the closing price of Range Resources shares on Friday. In premarket trading on Monday, shares of EQT were down 4.6 percent, while shares of Range Resources were up 10.1 percent. The deal is expected to close in the first quarter of 2027, subject to approval by regulators and shareholders.

What the natural gas deal includes

Under the terms reported on Monday, EQT shareholders will own about 73 percent of the combined company, and Range Resources investors will hold the remaining 27 percent. The combined company will produce more than 9 billion cubic feet of natural gas equivalent per day. It will control nearly 3 million net acres in the Appalachian Basin, hold more than 30 years of drilling inventory, and own about 3,700 miles of midstream infrastructure. EQT said the transaction would improve its free cash flow breakeven to below $2 per million British thermal units. The company also said the combination would generate about $325 million of annual savings within two years through corporate, operational and marketing efficiencies. Those savings, if achieved, would come from combining overlapping operations and from selling gas through a larger marketing operation.

Why natural gas demand is rising

Growing demand for natural gas from data centres has improved the outlook for US natural gas, according to the Reuters report on the deal. Producers have responded by seeking larger output, deeper drilling inventories and stronger marketing capabilities. Data centres need large amounts of power, and gas-fired generation is one source operators use to meet that demand. That shift has given producers a reason to secure long-lived reserves and the pipelines needed to move gas to buyers. The combined company will be based in Canonsburg, Pennsylvania, where EQT is headquartered. EQT's executive management team will lead the combined company. Two representatives from Range Resources, including chief executive Dennis Degner, will join the EQT board when the transaction closes. Keeping the headquarters and the leadership in place gives the combined company a single management structure from the start, rather than a merged team drawn equally from both sides.

What the natural gas deal means for Appalachia

The Appalachian Basin covers parts of Pennsylvania, Ohio and West Virginia, and it is one of the main sources of US natural gas production. A company controlling nearly 3 million net acres there will hold a large share of the drilling locations in the region. That scale can lower the cost of drilling and moving gas, because wells, pipelines and processing plants can be planned across a wider area. It can also change how gas is sold, because a larger producer can offer buyers larger volumes over longer periods. The deal still faces checks before it closes. Regulators will review the combination, and shareholders of both companies will vote on it. The companies have set the first quarter of 2027 as the expected closing date, which leaves time for those reviews. Until then, EQT and Range Resources will continue to operate as separate companies. The share price moves on Monday showed how investors read the terms in the first hours after the announcement. Range Resources shares rose on the premium offered, while EQT shares fell, a common pattern when a buyer pays a premium in stock. The longer test for the deal will be whether the promised savings and the larger production base hold up after the companies combine.