The operated position in the Appalachian Basin was Equinor’s last remaining operatorship in the US. Credit: Stuart Conway/Equinor.

Norwegian energy company Equinor has reached an agreement with EQT, a US natural gas producer, to exchange its operated assets in Ohio for a stake in the Northern Marcellus formation.  

This asset swap will see Equinor sell its 100% interest and operatorship in the Appalachian Basin assets in south-eastern Ohio in return for a 40% non-operated working interest in EQT’s assets in Pennsylvania. 

Equinor will pay EQT a cash consideration of $500m (Nkr5.5bn) to balance the transaction. 

The non-operating position allows Equinor to benefit from hydrocarbon sales without the responsibility of direct drilling operations, although it will contribute to associated costs.  

Following the transaction, Equinor’s average working interest in certain Chesapeake-operated Northern Marcellus gas units will increase from 15.7% to 25.7%.  

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Additionally, Equinor will enter into a gas buyback agreement with EQT to fulfil pre-existing gas sales commitments.  

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EQT’s non-operated natural gas assets in north-east Pennsylvania are expected to produce approximately 225 million cubic feet per day of net production by 2025. 

Equinor’s US business has been profitable, with earnings of $11bn since 2020.  

The operated position in the Appalachian Basin was Equinor’s last remaining operatorship in the US onshore before this deal.  

Equinor executive vice-president for international exploration and production Philippe Mathieu said: “With this transaction, we continue to high-grade the US portfolio and improve profitability by strengthening our gas position in the most robust part of the Appalachian Basin. These assets are well positioned to leverage anticipated positive developments in the US gas market.  

“The proposed swap improves portfolio robustness with an expected reduction in well break-evens and upstream carbon intensity. This also means that we have now fully exited all operated positions onshore US.”  

EQT president and CEO Toby Rice said: “This transaction marks an extremely positive start to our divestiture programme, bringing in over $1.1bn of value, including synergies and development plan optimization, for 40% of our non-operated assets, while retaining gas price upside. 

“We plan to opportunistically divest the remaining portion of our non-operated assets in north-east Pennsylvania and have tremendous confidence in being able to achieve our deleveraging goals.”     

The completion of the transaction is subject to approval from relevant authorities and is anticipated to close late in the second quarter of 2024. 

Last month, EQT and Equitrans Midstream signed a merger agreement to form a vertically integrated natural gas company in the US, with an enterprise value exceeding $35bn.