Street View: THQ deal strengthens EQT's leadership in Appalachia basin

Inductance Energy

07/09/2022 14:34

Top U.S. natural gas producer EQT Corp  EQT.N  said on Tuesday
it will buy Quantum Energy-backed THQ Appalachia I LLC, along
with associated pipeline operator assets from XcL Midstream, for
$5.2 bln from private producer Tug Hill  urn:newsml:reuters.com:*:nL4N30D3E7
    EQT also doubled its share buyback program to $2 bln and
raised its 2023 debt reduction target by $1.5 bln to $4 bln
    
    DEAL TO IMPROVE EQT'S FREE CASH FLOW YIELD    
    ** Cowen ("market perform", PT: $46) says while it considers
the deal pricey, it modestly boosts FCF yield
    ** BMO Capital Markets ("market perform", PT: $50) says it
views the deal as net neutral, but the large value could
pressure shares near-term
    ** Raises its 2022 and 2023 EPS and CFPS estimates
    ** Credit Suisse ("outperform") raises PT to $54 from $52
    ** Says the deal is consistent with EQT's acquisition goals:
accretive to FCF per share, reducing its unit cost structure,
adding scale and inventory in the Marcellus shale region, and
neutral to balance sheet leverage
    ** Truist Securities ("buy", PT: $63) says it believes the
lower required maintenance capex could benefit EQT from 2024
onwards, which could be attractive for investors especially when
combined with EQT's growing exposure to liquefied natural gas
(LNG)

 (Reporting by Ruhi Soni in Bengaluru)
 ((Ruhi.Soni@thomsonreuters.com
Twitter: https://twitter.com/ruhithere))