EQT agreed to buy Range Resources, creating America's biggest natural gas producer

EQT agreed on Monday to buy Range Resources in an all-stock deal. The combined company would be worth more than US$50 billion including debt, and both say it will be the largest natural gas producer in the US.

Range shareholders get 0.987 of an EQT share for each Range share. Range jumped 17.66% to US$53.56, while EQT slipped 1.40% to US$54.85.

The price is set in EQT shares, so it moves every day. At Monday's close, 0.987 EQT shares were worth about US$54.14. Range finished a little below that, and the gap is the market's allowance for the small chance the deal falls over.

Chart: EQT builds its gas giant for US$2 gas. Henry Hub gas, monthly average, US$ per million Btu, Oct 2021 to Sep 2026. The dashed line is EQT's claim: the merged firm covers its costs below US$2. — This story’s chart of the day.

Range's owners will hold about 27% of the combined company and EQT's the other 73%. Two Range directors, including chief executive Dennis Degner, will join EQT's board, and EQT's Toby Rice will run the business.

Together they will produce more than 9 billion cubic feet of gas equivalent a day, with over 30 years of drilling left. EQT expects US$325 million of annual savings within two years, and more than US$600 million eventually. The deal should close in the March quarter of 2027.

The test

EQT says the combined business covers its costs and generates cash with gas below US$2 per million British thermal units, the unit US gas is priced in. That low cost base is the point of the deal. A full year of combined results will show whether the savings are real.

This story ran in Paperwork and Panic Tuesday 27 October’s edition, with the market snapshot, the other two stories, the numbers and the week ahead. Read the whole edition →

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