EQT, a Pennsylvania-based natural gas producer has agreed to sell nearly 2.5 million net acres in the Huron Play in Southern Appalachia to Diversified Gas and Oil for $575m.
The acreage to be divested, which is currently considered to be non-core by EQT, is spread across Kentucky, Virginia, and southern West Virginia. The company will use the proceeds from the sale to cut down its net-debt.
EQT holds a 92% net revenue interest in the acreage which comprises around 12,000 wells across Kentucky, West Virginia and Virginia and currently producing close to 200MMcfe per day.
The company revealed that the divested assets have 1.6Tcfe total net proved developed reserves and also include 10,299.8km of low-pressure gathering lines and 59 compression stations.
EQT said that the transaction also offloads nearly $200m of plugging and other liabilities associated with the assets. However, the company will retain the deep drilling rights throughout the acreage.
On the other hand, for the Alabama-based Diversified Gas and Oil, the transaction will materially expand its operational presence in the US Appalachian Basin. It also more than doubles the company’s production to 60kboepd while boosting its PDP Reserves to 393mmboe.
Diversified Gas and Oil CEO Rusty Hutson said: “Since our Admission to AIM in February of last year, we have grown the Company rapidly through a series of transformative acquisitions to become the largest producer on AIM.
“This transaction is yet another game-changer for us as we double our production once again to become one of the largest producers listed in the London market.
Subject to customary closing conditions, the transaction is anticipated to be completed by the month end.
In early April, Diversified Gas and Oil completed a previously announced $85m acquisition of certain Appalachian oil and gas assets from CNX Gas.
Prior to that, in March, the company acquired Alliance Petroleum from Lake Fork Resources Acquisition (LFRA) for $95m to expand its position in the Appalachian Basin.