The Zhitong Finance App learned that EQT Energy (EQT.US) has agreed to acquire Range Resources Corp. on an all-stock basis, and the company's valuation after the merger exceeds 50 billion US dollars. The deal will create America's largest natural gas producer with a daily output of more than 9 billion cubic feet. EQT is expected to achieve annual cost savings of $325 million over two years.
According to the terms of the deal, Range shareholders will receive 0.987 EQT shares for every 1 share held, and will hold approximately 27% of the combined company's shares after the transaction is completed. The deal is expected to close in the first quarter of 2027 and is subject to shareholder and regulatory approval.
Based on Range's approximately 233.7 million tradable shares, the transaction consideration was about US$12.83 billion, implying a price of US$54.91 per share, a premium of about 20.6% over Range's closing price last Friday.
The core logic of the deal was not to “buy production,” but rather to combine the assets of the two companies in the same Appalachian Basin into a lower cost curve. After the merger, the company controlled nearly 3 million net acres of land in the Appalachian Basin, with a net output of more than 9 billion cubic feet per day, over 30 years of drilling inventory and approximately 3,700 miles of midstream infrastructure.
EQT predicts that through company-level, operational and marketing efficiency, annual basic synergy benefits of about US$325 million can be achieved within two years, and is expected to exceed US$600 million in the long term; the cumulative free cash flow estimated at current prices over the next five years is about US$20 billion.
What is more signalling is a downward shift in the break-even point. EQT said the transaction lowered its unleveraged free cash flow break-even point to less than $2 per million British thermal units, while increasing the diversification of natural gas condensate (NGL), enabling the company to maintain free cash flow resilience at every stage of the commodity price cycle.
For a pure natural gas producer, the break-even point is below $2 per million British thermal units, which means there is still financial room for continuous dividend payments and repurchases even when the Henry Hub price falls back to a recent low level. This is both a defensive barrier and a pricing power signal sent by industry integrators to the market.