LNG

EQT Corp., the leading US natural gas producer in the Appalachian shale basins and an emerging LNG player, swung to a profit as the business is currently being overhauled with the acquisition of Equitrans Midstream and with effective operatorship of America’s newest natural gas infrastructure, the Mountain Valley Pipeline.

EQT Corp., the leading US natural gas producer in the Appalachian shale basins and an emerging LNG player, reported a dropped in net income in the first quarter of 2024 as prices were lower, sales increased and a merger was agreed with Equitrans Midstream Corp.

Equinor, the Norwegian supplier of pipeline natural gas to Europe and LNG cargoes, has agreed a US deal with shale-gas giant EQT Corp. to swap Equinor’s operated position in the Marcellus and Utica shale formations in Ohio for a stake in EQT’s non-operated interest in the Northern Marcellus shale formation.

Under the transaction, Equinor will sell 100 percent interest in and operatorship of its onshore asset in the Appalachian Basin, located in southeast Ohio, in exchange for 40 percent of EQT’s non-operated working interest in the North Marcellus shale in Pennsylvania.

Equinor said it would pay a cash consideration of $500 million to EQT to balance the overall transaction, swapping for resources that contribute to growing cashflows and further reducing carbon-dioxide emissions intensity in the international portfolio.

Shale Gas No. 1

EQT is the largest producer of natural gas in the US with operations in Pennsylvania, West Virginia and Ohio.

Equinor is also the owner of the Hammerfest LNG export plant in northern Norway that came on stream in 2007 and it was initially developed to export LNG to the US before the extent of America’s shale-gas resources became clear and the US later became the world’s No. 1 LNG exporter.

Following the shale swap transaction, Equinor said it would increase its average working interest from 15.7 percent to 25.7 percent in certain Chesapeake Energy-operated Northern Marcellus gas units.

However, the strategy of the Norwegian company also involves moving out of all operated shale-gas interests in the main US basins.

“To cover pre-existing gas sales commitments, Equinor will enter a gas buy-back agreement with EQT,” the Norwegian company explained.

Philippe Mathieu, executive vice president for Exploration and Production International at Equinor, said this transaction means the company will continue to “high-grade the US portfolio and improve profitability by strengthening our gas position” in the most robust part of the Appalachian Basin.

“These assets are well positioned to leverage anticipated positive developments in the US gas market,” stated Mathieu.

“The proposed swap improves portfolio robustness with an expected reduction in well break-evens and upstream carbon intensity. This also means that we have now fully exited all operated positions onshore US,” he explained.

Equinor US strategy

“The US is a core area for Equinor where we’re building a broad energy business within offshore and onshore oil and gas, offshore wind, and new low-carbon value chains,” Mathieu added.

EQT President and Chief Executive Toby Z. Rice stated said he was very pleased with the Equinor swap deal.

“This transaction marks an extremely positive start to our divestiture program, bringing in over $1.1 billion of value, including synergies and development plan optimization, for 40 percent of our non-operated assets, while retaining gas price upside,” stated Rice.

“We plan to opportunistically divest the remaining portion of our non-operated assets in Northeast Pennsylvania and have tremendous confidence in being able to achieve our de-leveraging goals,” he added.

Equinor said its US business had recorded $11 billion in earnings since 2020.

“Prior to this transaction, the Appalachian Basin operated position was the last remaining operatorship held by Equinor in the US onshore,” the company added.

Equinor noted that final completion will, among other things, be dependent on approval by relevant authorities. 

EQT Corp., the leading US natural gas producer in the Appalachian shale basins, is merging in a combination worth over $23 billion with Equitrans Midstream, the operator of natural gas gathering systems and the owner of the key Mountain Valley Pipeline.

EQT Corp., the leading US natural gas producer in the Appalachian shale basins and an emerging LNG player, has made a “strategic decision” to curtail approximately 1 billion cubic feet per day of gross production beginning immediately.

EQT Corp., the leading US natural gas producer in the Appalachian shale basins, reported solid annual net income even as earnings dropped for the fourth quarter and has now signed three LNG tolling agreements on the Gulf Coast and was pursuing sales contracts.

Northern Oil and Gas Inc., the US energy company based in Minneapolis, is proceeding with two acquisition transactions for natural gas in the Appalachian Basin and oil and gas in the Northern Delaware Basin in an action-filled year of US merger and acquisition activity.

EQT Corp., the leading US natural gas producer in the Appalachia Shale Basin, reported second-quarter losses due to falls in output and prices, though advanced its direct liquefied natural gas prospects by signing a heads of agreement for tolling at the Lake Charles LNG export project in Louisiana for 1 million tonnes per annum.

EQT Corp., one of the leading US natural gas producers and leader of the “Unleash US LNG” advocacy campaign, has formed a strategic alliance with Context Labs to advance the commercialization of verified low-carbon intensity natural gas products and carbon credits.

Moody's Investors Service, the US credit ratings agency, said that increasing global demand for natural gas is a growth opportunity for US LNG producers, though delivery depends more on the timely construction of natural gas pipeline infrastructure to support new US LNG supplies.

Moody’s said in a research note than Europe's energy crisis, led by the cut-off of Russian supplies to Germany, should keep the LNG market tight until 2025-2026, supporting cash flow generation for US LNG producers.

The report also noted the potential recovery in Chinese domestic demand in 2023 that will bring more competition to the market.

“European demand might accelerate LNG capacity expansion in the US, but that would require long-term offtake commitments from European buyers, even as they are working to reconcile new energy security needs,” said Moody’s.

Most of the announced US LNG growth projects through 2025-2026 have long-term commitments from Asian buyers, the original source of the US LNG boom since the mid-2010s, and international commodity traders stepped up their LNG purchases in 2022.

However, LNG producers require long-term offtake commitments to underpin financing of new LNG infrastructure projects.

Capital allocation

The report stated that LNG projects should in turn spur further capital allocation for constructing new pipeline capacity to connect the largest US gas producing regions and new export infrastructure.

These new pipeline projects will need to win permitting approvals from the US Federal Energy Regulatory Commission.

“Today's peak nameplate capacity of nearly 14 billion cubic feet per day reflects only about one-quarter of the capacity of all announced LNG projects, including several with partial or full FERC approval and 10 bcf per day under construction,” the report added.

The LNG projects include the Corpus Christi plant expansion in Texas and the Port Arthur project as well as others on the Mississippi River and the Brownsville Ship Channel.

Moody’s noted that the Marcellus and Utica shale basins together contributed roughly one-third of US dry gas production, though limited pipeline takeaway capacity has constrained growth for those regions.

In the fourth quarter of 2022, US dry natural gas production stood at 100 bcf, exceeding year-earlier production by 3 percent.

Moody’s said that this was largely due to increased drilling and pipeline expansions in the Haynesville Shale and rising volumes of associated natural gas delivered by oil producers in the Permian Basin.

Several large US LNG projects now under construction will add significant new capacity by the mid-2020s.

Several of the US pipeline giants have already announced projects that will supply gas to LNG infrastructure. They include Williams Company’s Louisiana Energy Gateway, Energy Transfer’s Gulf Run and Kinder Morgan’s Permian Highway Pipeline expansion.