EQT Corporation (NYSE: EQT), today issued the following statement in response to a filing
from JANA Partners LLC (JANA):
The proposed acquisition of Rice Energy Inc. (NYSE: RICE) represents a pivotal strategic opportunity for EQT to have an unmatched asset position – and world-class inventory – in one of the most prolific natural gas basins in the United States. EQT’s Board and management team remain confident the Rice transaction will deliver significant value and is in the best interests of all EQT shareholders.
JANA has suggested that EQT’s presentation of the combined Rice-EQT acreage map is misleading, and that the existence of non-contiguous acreage contained within the pro-forma footprint of the combined Company implies that stated operational synergies from the transaction are not achievable. This is emphatically not the case.
EQT has been operating in the Appalachian Basin for nearly 130 years, has drilled more than 2,500 horizontal wells, and has drilled the longest lateral in the Marcellus (to-date) at 17,400 feet. It is standard industry practice to manage any non-contiguous acreage requirements through well path adjustments, smaller bolt-on acquisitions, and tactical fill-ins, all of which are part of the current development plan at an estimated cost of up to $200 million annually. In addition, there are often small-scale acreage trades between operators that are used to fill in gaps. Each of these methods are routinely employed by EQT and other Appalachian operators to build their respective development programs. Given the multitude of legacy natural gas leases across Appalachia, it is commonplace for small acreage plots to exist given the historical ownership of land in the region.
The combined Rice-EQT acreage profile was evaluated thoroughly and carefully, and based on our development plan, which includes the cost of tactical fill-ins, the Company is confident it will achieve the $2.5 billion in synergies that it has identified. For JANA to suggest that this acreage acquisition strategy, which is standard for Appalachian operators, is inconsistent with achieving the anticipated benefits of the transaction is highly misleading and inaccurate.
In addition, JANA seems to believe shareholders face a binary decision between either approving the proposed Rice transaction – or – taking action to address EQT’s sum-of-the-parts discount. In fact, that is simply not the case. Approval of the Rice transaction will actually enhance EQT’s ability to unlock value by improving the competitive positioning of each of EQT’s key businesses and increasing optionality. As previously announced, immediately upon the closing of the Rice transaction, EQT will establish a committee of the Board of directors to evaluate options for addressing EQT’s sum-of-the-parts discount and the Board expects to announce a decision by the end of the first quarter of 2018.
The EQT Board unanimously approved the Rice transaction and urges shareholders to use the WHITE proxy card to vote “FOR” all agenda items in advance of the special meeting on November 9, 2017. If shareholders have any questions about how to vote, or need additional assistance, please contact EQT’s proxy solicitor: Innisfree M&A Incorporated, toll-free at (877) 717-3930 (from the U.S. and Canada) or (412) 232-3651 (from other locations).
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