EQT (EQT.US) to acquire Range Resources in an all-stock deal worth US$12.8 billion, creating the largest natural gas producer in the United States

EQT Corporation (EQT.US) has agreed to acquire Range Resources Corp. in an all-stock deal, valuing the combined company at more than US$50 billion. The transaction will create the largest natural gas producer in the United States, with daily production exceeding 9 billion cubic feet equivalent. EQT expects to achieve US$325 million in annual cost savings within two years. Under the terms of the deal, Range shareholders will receive 0.987 shares of EQT stock for each share held and will own approximately 27% of the combined company after the transaction closes. The deal is expected to be completed in the first quarter of 2027, subject to shareholder and regulatory approvals. Based on Range's approximately 233.7 million shares outstanding, the consideration is approximately US$12.83 billion, implying an offer price of US$54.91 per share, a premium of approximately 20.6% to Range's closing price last Friday. The core rationale for this deal is not "buying production" but rather combining the two companies' assets in the Appalachian Basin into a lower cost curve. Following the merger, the company will control nearly 3 million net acres in the Appalachian Basin, with net production exceeding 9 billion cubic feet equivalent per day, more than 30 years of drilling inventory and approximately 3,700 miles of midstream infrastructure. EQT expects to achieve approximately US$325 million in annual base synergies within two years through corporate-level, operational and marketing efficiencies, with the potential to exceed US$600 million over the long term; cumulative free cash flow over the next five years is estimated at approximately US$20 billion at current prices. More significant is the downward shift in the breakeven point. EQT said the transaction lowers its unlevered free cash flow breakeven point to below US$2 per million British thermal units, while enhancing natural gas liquids (NGL) diversification, enabling the company to maintain free cash flow resilience across all stages of the commodity price cycle. For a pure-play natural gas producer, a breakeven point below US$2/MMBtu means that even if Henry Hub Group, Inc. Class A prices fall back to recent lows, the company still has the financial capacity to sustain dividend payments and buybacks. This is both a defensive barrier and a signal of pricing power that an industry consolidator is sending to the market.