Equinor to Raise Stake in Northern Marcellus with $1.25 Billion EQT Deal

Equinor ASA has signed an agreement with EQT Corp. to acquire an additional non-operating interest in the Northern Marcellus formation in the United States for $1.25 billion, the companies said.

The transaction, following a swap transaction between the two companies that resulted in Equinor no longer having operated assets in the U.S. onshore, involves EQT’s entire stake in natural gas assets in Northeast Pennsylvania operated by Expand Energy Corp. The assets have a projected 2025 production of 350 million cubic feet a day (MMcfd) net to EQT, according to a statement by the Pittsburgh City-based company posted on its website.

“With this transaction, Equinor is increasing its average working interest in the Northern Marcellus asset from 25.7 percent to 40.7 percent”, Equinor said in a separate press release. “The transaction adds approximately 80,000 barrels of oil equivalent per day (boe/d) to Equinor’s US production in the near term”.

“We continue to high-grade Equinor’s international portfolio in line with our strategy, improving robustness by adding more natural gas volumes in a core market where we produce with low break-evens and low-intensity upstream emissions”, Philippe Mathieu, executive vice president for international exploration and production at Equinor, said in the statement on Equinor’s website. “We are well positioned in this premium acreage to capitalize on positive long-term demand indicators in the US gas market”.

Equinor’s upstream activity in the U.S. has delivered over $5.5 billion in adjusted operating income after tax since 2021, the statement noted.

“The US is a core country for Equinor, where we have shaped a robust onshore and offshore oil and gas portfolio, alongside our activities in offshore wind, battery storage, and low-carbon value chains”, Mathieu added.

Equinor closed the earlier swap deal with EQT in the second quarter, exchanging several gas assets in the U.S. mainly in Pennsylvania state.

Under the swap, announced April 15, 2024, EQT transferred non-operated assets that had a greater net gas output, based on 2025 estimates, compared to those it obtained from Equinor. However, EQT’s acquisition included infrastructure assets and a gas purchase commitment from Equinor.

The EQT sale under the swap involved a 40 percent stake in the Northern Marcellus formation in Northeastern Pennsylvania that was projected to reach 225 MMcfd of net production in 2025, according to separate press releases by the companies.

Equinor said in its announcement of the swap agreement, “Following the transaction, Equinor will increase its average working interest from 15.7 percent to 25.7 percent in certain Chesapeake-operated Northern Marcellus gas units”.

In exchange EQT took over Equinor’s operated stakes in the Marcellus and Utica shale formations in Ohio state, Equinor said. EQT received about 26,000 net acres in Monroe County, which had a net 2025 production estimate of 135 million cubic feet equivalent per day (MMcfepd), according to the EQT announcement.

In Lycoming County, Pennsylvania, EQT also acquired around 10,000 net acres with a net 2025 production estimate of 15 MMcfepd, EQT said.

Additionally EQT acquired the remaining 16.25 percent in EQT-operated gathering systems that serve EQT-operated assets in Lycoming, according to the EQT news release.

The transaction also included “a gas buy-back agreement whereby Equinor will purchase gas from EQT at a premium to in-basin pricing through the first quarter of 2028”, EQT added.

Equinor said the gas purchase under the swap deal would “cover pre-existing gas sales commitments”.

EQT expects to generate approximately $75 million in free cash flow from the Equinor midstream assets.

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