EQT gets antitrust request over $5.2 billion Appalachia deal

Simon Casey and Sara Forden, Bloomberg December 02, 2022

(Bloomberg) — EQT Corp. said the U.S. antitrust regulator asked for additional information and documentary materials in connection with a $5.2 billion acquisition announced in September, a move that raises questions on the largest US natural gas producer’s ability to keep its acquisition spree.

Pittsburgh-based EQT plans to buy THQ Appalachia I LLC, a gas producer backed by Quantum Energy Partners. The cash-and-stock transaction also includes XcL Midstream LLC, which owns about 95 miles (153 km) of gas pipelines.

EQT, led by Chief Executive Officer Toby Rice, has become a serial acquirer in the past two years as it consolidates holdings across the Marcellus shale basin in the northeast US. The company last year bought assets from Alta Resources Development LLC for about $2.9 billion. It also purchased Chevron Corp.’s assets in Appalachia for $735 million in 2020. The THQ deal would boost EQT daily output to roughly 6.3 billion cubic feet, the equivalent to nearly 20% of dry gas production in the Appalachia basin.  

“We believe failure to close the deal would raise questions in the market about the feasibility of further consolidation in the Appalachian basin and be a negative for the stock,” Cameron Bean, an analyst at Scotia Capital Inc., said in a note to clients. 

President Joe Biden has made reinvigorating antitrust a cornerstone of his economic policy, signing an executive order promoting competition last summer and selecting two prominent progressives to helm antitrust agencies -- Assistant Attorney General for Antitrust Jonathan Kanter at the Justice Department and Lina Khan at the Federal Trade Commission.

Khan is pushing the FTC to take a tougher approach to market concentration and has said she plans to revive use of the agency’s founding statute that she said would allow the agency to tackle behavior that traditional antitrust laws have had trouble addressing, for example when a series of acquisitions represent an anticompetitive consolidation on a combined basis.

“Oil and gas deals are complicated in that they can impact many different relevant markets,” said Jennifer Rie, an antitrust analyst with Bloomberg Intelligence. “It can take some digging by the FTC to suss out where any potential harm to competition lies.”

The FTC’s request for more information was disclosed Friday in a company filing. EQT said it has begun talks with the sellers of the assets about a potential extension of the deal’s closing date.

Shares of EQT dropped 4% to $39.87 as of 10:20 a.m. in New York.

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