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On Monday, EQT Corp announced that it has agreed to acquire Range Resources in an all-stock transaction valued at over $50 billion, which also involves debt. The joint venture would form the biggest vertically-integrated natural gas provider in the U.S., the companies said.

As part of the deal, Range Resources stockholders will get 0.987 shares of EQT Corp for each Range Resources share that they own. The offer places the value of Range Resources around $12.83 billion, using a Reuters calculation that includes the company's 233.68 million outstanding shares, LSEG data showed.

The EQT-Range Resources deals share price is $111.44, while the share price of Range Resources is $17.53.

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The transaction suggests a price of $54.91 for Range Resources' stock. This is close to 20.6% higher than Range Resources' share price Friday, according to calculations by Reuters. After the announcement, EQT stock tumbled 4.6% in pre-market trading Monday. On the other hand, Range Resources shares were up 10.1% in pre-market trading.

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The US natural gas industry has made a positive turnaround due to increasing demand from its data centres. Producers are seeking to boost production, build up drilling inventories and improve marketing skills to take advantage of this demand.

The combined company is producing and owning the gas, as well as the infrastructure.

The merged company is expected to produce more than 9 billion cubic feet of natural gas equivalent per day. It will also manage almost 3 million net acres in the Appalachian Basin, one of the nation's biggest natural gas-producing areas, the companies said.

The new business will be able to leverage over 30 years of inventory in drilling. It will also have approximately 3,700 miles of midstream facilities to move and process natural gas, the companies said.

Hydraulic fracturing and a merger with EQT-Range Resources.A merger with EQT-Range Resources and hydraulic fracturing timeline and leadership.

Upon closing, the combined company's shareholders will comprise approximately 73% EQT shareholders and approximately 27% Range Resources shareholders, the companies said. The deal is expected to wrap up in the first quarter of 2027. But it still needs regulatory clearance, as well as shareholder approval of the companies, said the announcement.

At the time of close, two members of Range Resources will be elected to a seat on EQT's board of directors. They will involve Range Resources CEO Dennis Degner, the companies said. The combined company's executive management team will be led by EQT's current management team. The company's headquarters will stay in Canonsburg, PA, the companies said.

EQT projects $325 million worth of annual savings

The acquisition will reduce its free cash flow breakeven to less than $2 per British thermal unit (per MMBtu), said EQT. Reuters reported that this translates into the company's expectation cash flow will be generated at a lower natural gas price than previously.

When the two businesses are combined, EQT says it will save approximately $325 million annually within two years of the transaction. The savings include enhancements to the company's operations, manufacturing and marketing, the company said.

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