EQT Corp. (EQT) will acquire all of membership interests in Alta's upstream and midstream subsidiaries for approximately $2.925 billion

EQT Corporation (NYSE: EQT) today announced that it has entered into a purchase agreement with Alta Resources Development, LLC (Alta), pursuant to which EQT will acquire all of the membership interests in Alta's upstream and midstream subsidiaries for approximately $2.925 billion, subject to customary closing adjustments. The transaction is expected to close in the third quarter of 2021, with an effective date of January 1, 2021.

Transaction Highlights:

• Attractive valuation with high-margin and robust free cash flow generation
  • Projected annual free cash flow(1) of $300-$400 million
  • Projected annual adjusted EBITDA(1) of $550-$600 million
  • Purchase price implies an ~18% unlevered free cash flow yield(1)
• Low leverage acquisition accelerates EQT's path back to investment grade metrics
  • Immediately reduces leverage(2); improving 0.3x by year-end 2022
  • Establishes a leverage(2) profile comfortably below 2.0x target
• Accretive to free cash flow per share
  • Projected to increase free cash flow(1) by 55%, or $2.0 billion, through 2026
  • Free cash flow per share(1) improves by more than 15% through 2026
• Adds highly prolific inventory with superior well economics in the core of the Northeast Marcellus
  • Integrated midstream assets and mineral ownership drive high margin operated development
  • Direct exposure to the geologic core through non-operated position

President and CEO Toby Rice stated, "Today marks another major milestone for EQT as we continue on our path to becoming the operator of choice for all of our stakeholders. The acquisition of Alta's assets represents an attractive entry into the Northeast Marcellus while accelerating our deleveraging path, providing attractive free cash flow per share accretion for our shareholders and adding highly economic inventory to EQT's already robust portfolio. In addition to increasing our long-term optionality, we believe this transaction accelerates both our path back to investment grade metrics and our shareholder return initiatives. We look forward to applying our differentiated modern operating model to maximize the prolific value embedded in these premier assets."

Asset Overview: Expansive Position in the Core Northeast Marcellus

• 300,000 core net Marcellus acres; 98% held by production
  • 222,000 net acre operated position
  • 78,000 net acre non-operated position
• 1.0 Bcfe per day of current net production, 100% dry gas
• 300-miles of owned and operated midstream gathering systems
• 100-mile freshwater system with 255 million gallons of storage capacity
• Attractive firm transportation portfolio to premium demand markets
• Existing hedge book covering approximately 35% of production through 2022

Strategic Rationale: Checks all the Boxes for Attractive ConsolidationThis acquisition fits firmly within our strategic acquisition framework, while also establishing a significant and strategic position in the core of the Northeast Marcellus. We expect the acquisition to be accretive to both free cash flow per share and net asset value (NAV) per share, while also accelerating our deleveraging strategy and underscoring our commitment to achieving investment grade credit metrics.

Approximately 1.0 Bcfe per day of high-margin net production is expected to bolster our free cash flow profile by adding approximately $300-400 million of annual free cash flow(1) and a total of approximately $2.0 billion of free cash flow(1) through 2026, an improvement of approximately 55% compared to our pre-transaction outlook. As a result, this transaction is projected to accelerate our deleveraging strategy, comfortably pulling near-term leverage(2) below our 2.0x target. We estimate this transaction will improve leverage(2) by 0.3x and 0.5x by year end 2022 and 2023, respectively. Our improved leverage profile provides a compelling case for an investment grade credit rating and is expected to accelerate our strategy to return value to shareholders.

This strong free cash flow contribution is a result of Alta's low-cost structure, driven by low royalty burdens averaging 14%, direct mineral ownership, a premium firm transportation portfolio and an owned and operated midstream gathering system serving the operated acreage position. We expect the transaction to reduce EQT's pro forma annual corporate free cash flow breakeven(3) gas price by at least $0.10 per mmbtu.

Transaction Financing: The total purchase price for the transaction is $2.925 billion, consisting of $1.0 billion in cash and approximately $1.925 billion in EQT common stock issued directly to Alta's shareholders.

We expect to fund the $1.0 billion of cash consideration with cash on hand, drawings under our revolving credit facility and/or through one or more debt capital markets transactions, subject to market conditions and other factors. Bank of America, N.A. and JPMorgan Chase Bank, N.A. have jointly provided $1.0 billion of committed financing in connection with the transaction and we have access to over $1.4 billion of liquidity under our unsecured credit facility.

The stock consideration consists of approximately 105 million shares of EQT common stock representing $1.925 billion, based on the 30-day volume-weighted average price as of May 5, 2021. The transaction was unanimously approved by our Board of Directors. EQT shares issued as part of the transaction will be distributed directly to Alta shareholders, which represent a diverse set of financial institutions and individuals. No Alta shareholder will receive more than 5% of EQT's pro forma outstanding shares of common stock in connection with the transaction.

The transaction is expected to close in the third quarter of 2021, subject to satisfaction of customary closing conditions, including the approval by EQT's shareholders of the issuance of the common stock consideration. All post effective date purchase price adjustments will be netted against the stock consideration and are expected to result in a reduction of approximately 11 million shares issued at closing.

BofA Securities served as financial advisor to EQT, and Latham & Watkins, LLP is serving as EQT's legal counsel on the transaction. Citi Global Markets Inc. served as exclusive financial advisor to Alta, and Kirkland & Ellis LLP is serving as Alta's legal counsel.

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