Episode summary
EQT CEO Toby Rice on buying Range Resources: We've created a higher-quality business
CNBC Power Lunch
· · 5 min · Hosts: Power Lunch · Guests: Toby Rice
Summary
EQT’s $13 billion all-stock purchase of Range Resources is presented by Toby Rice as a move to create the largest natural gas producer in the United States and to strengthen an already dominant Appalachian gas business. Rice says the combined company will be an “American natural gas champion,” and argues that even after paying a premium, the deal is accretive on free cash flow and net asset value per share.
He says the strategic logic is grounded in geography and operating overlap in southwestern Pennsylvania and the Appalachian region. EQT expects more than $625 million of synergies, split roughly between base operating savings and longer-term upside from midstream optimization and capturing basin demand. Rice frames the acquisition as a way to improve scale, costs, balance-sheet strength, inventory depth, and marketing reach.
Rice also ties the deal to growing power demand from AI and data centers, saying demand in basin has risen from 20 Bcf a day to over 25 Bcf a day. He argues the combined company is positioned to serve that market with more than 17 Bcf a day of productive capacity.
On exports, Rice says American natural gas remains critical to Europe after the Nord Stream disruption and the Middle East conflict, pointing to international prices above $30 per million BTU versus about $3 in the U.S. He argues that U.S. energy independence has insulated American consumers and created an economic advantage.
Key takeaways
- Toby Rice says EQT’s $13 billion all-stock purchase of Range Resources is accretive on free cash flow and NAV per share despite the premium.
- Rice says the combined company will target more than $625 million of synergies, split between operating savings and longer-term infrastructure and demand capture.
- He says the merged EQT and Range will have over 17 Bcf a day of productive capacity, positioning it to serve rising Appalachian gas demand.
- Rice says AI-related demand in basin has grown from 20 Bcf a day to over 25 Bcf a day, and he sees no slowdown.
- He argues U.S. natural gas is strategically important to Europe, with international prices above $30 per million BTU versus about $3 in the U.S.
Notable quotes
“WE'VE STILL BEEN ABLE TO PRESENT THE DEAL THAT IS ACCRETIVE ON VALUE METRICS LIKE FREE CASH FLOW AND NAV PER SHARE”
“WE'VE CREATED A HIGHER QUALITY BUSINESS THAT REGARDLESS OF WHAT METRIC THAT MATTERS IN CREATING VALUE AND ENERGY, EQT IS ON THE TOP OF THE CHARTS ACROSS THE BOARD”
“THE SYNERGIES THAT WE'VE ANNOUNCED WOULD BE OVER $625 MILLION”
“WE'RE SEEING WHAT WAS 20 BCF A DAY OF DEMAND IN BASIN HAS NOW GROWN TO OVER 25 BCF A DAY OF DEMAND”
“INTERNATIONAL NATURAL GAS PRICES MOVE FROM ABOUT $10 TO NOW THEY'RE OVER $30 PER MILLION BTU”
How the episode opens
All right. Let
All right, let us talk about a major energy deal that happened earlier this week. Pittsburgh based EQT buying Range Resources. It's an all stock deal valued at $13 billion in transaction.
But 50 billion if you include all the debt and the enterprise value. The huge natural gas deal brings together two of the biggest producers in pennsylvania and parts of appalachia, and easily creates the largest natural gas producer in the united states. Joining us now with a cnbc exclusive is ceo Toby Rice.
Toby, good to have you back on. Appreciate you joining us. No it's been a busy week.
Why the deal. Why buy Range Resources.
Yeah. So the question is what happens when you take america's natural gas champion and you bolt on one of the highest quality asset bases right next door with Range Resources? When you combine those entities, you create america's undisputed natural gas champion.
Even with this this premium that we've paid, we've still been able to present the deal that is accretive on value metrics like free cash flow and nav per share. But most importantly, we've created a higher quality business that regardless of what metric that matters in creating value and energy, EQT is on the top of the charts across the board. Whether you're talking about cost structure, balance sheet, strength, inventory, depth, marketing, platform size, and this is a company that is positioned for really tremendous sustainable growth potential.
I know they're headquartered in texas, but their operations are kind of in your backyard, right? Southwestern pennsylvania and the appalachian region, I would imagine there's huge economies of scale and synergies available to you now with the combined once the deal closes.
Yeah, absolutely. This is a this is an asset we are very familiar with.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- eqt acquisition
- range resources deal
- mergers and acquisitions
- energy market
- corporate strategy
Companies and tickers mentioned
- EQT
- RRC
- EQT
- Range Resources
- CNBC PRO
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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