EQT plans to fund the cash portion of the transaction with available cash and borrowings under its revolving credit facility. Credit: T. Schneider/Shutterstock.

EQT has signed an agreement to acquire the upstream and midstream assets of Olympus Energy for a total consideration of $1.8bn.

The acquisition, which includes approximately 90,000 net acres and a production rate of 500 million cubic feet per day (mcf/d), is expected to significantly enhance EQT’s footprint in south-west Pennsylvania.

The payment for the acquisition will be made through a combination of approximately 26 million shares of EQT common stock, valued at $1.3bn, and $500m in cash.

EQT plans to fund the cash portion with available cash and borrowings under its revolving credit facility.

The assets involved in the transaction are expected to generate an average annual adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) of approximately $530m and unlevered free cash flow of around $270m over the next three years, based on current strip pricing.

This implies an attractive adjusted EBITDA multiple of approximately 3.4 times and an unlevered free cash flow yield of around 15%.

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Olympus Energy’s assets include more than ten years of high-quality Marcellus inventory and an additional seven years of potential from the Utica formation.

The company’s integrated platform and inventory are comparable to EQT’s industry-leading cost structure in terms of unlevered free cash flow breakeven price.

The transaction is due to be completed early in the third quarter of 2025, pending regulatory approvals and customary closing conditions.

EQT’s Board of Directors has unanimously approved the deal.

Moelis & Company acted as the lead financial advisor, while Greenhill, a Mizuho affiliate, provided financial advice to EQT.

Legal counsel for EQT is provided by Vinson & Elkins. Jefferies served as financial advisor to Olympus Energy, with Kirkland & Ellis as legal counsel.

In a related development, EQT announced a joint venture (JV) with Blackstone Credit & Insurance (BXCI) in November last year.

The JV encompasses EQT’s interests in critical infrastructure assets including the Mountain Valley Pipeline, transmission and storage facilities, and the Hammerhead Pipeline.

BXCI will invest $3.5bn in cash for a non-controlling equity stake in the JV, which is valued at $8.8bn.