SELLING POINTS
As Equinor sheds its last operated assets in the U.S., EQT picks them up along with $500M
In a major land swap deal, Downtownbased gas producer EQT Corp. sold a minority stake in shale gas wells in northeastern Pennsylvania to Equinor, a Norwegian energy company.
EQT does not operate those assets — Chesapeake Energy does. EQT has been trying to extract itself from that area of the state, which is outside of its core of operations in southwestern Pennsylvania, northern West Virginia and eastern Ohio.
And Equinor has been trying to focus its U.S. oil and gas portfolio in non-operated assets — those in which Equinor holds a financial stake but which are run by other companies.
As part of the deal, which comes with $500 million in cash for EQT, Equinor is also transferring to EQT control of land and gas production in Monroe County, Ohio, and in Lycoming County, Pa.
In a statement accompanying the announcement Monday, EQT’s CEO Toby Rice said this marks “an extremely positive start” of EQT’s earlier-announced effort to sell off some $3.5 billion in assets over the near term.
That may involve selling off the Mountain Valley Pipeline, which is still being completed by Equitrans Midstream Corp., a company that spun out of EQT in 2018 and that plans to merge back into its former parent this year.
The sale of 40% of EQT’s interest in the northeastern Pennsylvania assets represents about a quarter of the company’s gas production in that area. Mr. Rice, in a statement, said EQT will sell the rest at some point.
The divestment program is intended to reduce the company’s debt.
For Equinor, the deal frees the company from directly operating oil and gas assets in the U.S.
Equinor, which was known as Statoil until 2018, made a push into U.S. shale gas around 2008, buying up companies and assets, and partnering in joint ventures in Appalachia, North Dakota and Texas. Over the following decade, it sustained tremendous losses from those operations and has been pulling back on them for several years. In its public filings, Equinor says a focus on Appalachian gas is good for its environmental metrics, because this basin is the lowest in terms of average methane emissions among the shale plays.
Equinor has also expressed an interest in developing carbon storage here. For a time, it was thought to be partnering with Shell to propose a hydrogen hub in Appalachia that would revolve around hydrogen made from natural gas, with the resulting CO2 emissions captured and sequestered underground.
Equinor eventually decided not to submit the application, and Shell followed suit. The Norwegian company said in its latest annual report that it had drilled a carbon capture well somewhere in Appalachia, “albeit with negative results.”
With the EQT deal expected to close in the second quarter, Equinor has also signed a contract with EQT to buy gas from the U.S. firm that replaces what it would have generated from its operated assets through the beginning of 2028.