Equinor strengthens its gas position with a swap of onshore assets in the US

Equinor expects to boost profitability with an improved US gas position as part of an asset swap with EQT Corporation. Under the transaction agreement, the Norwegian oil and gas company will swap its operated scenario in the Marcellus and Utica shale formations in Ohio for a stake in EQT’s non-operated interest in the Northern Marcellus formation.

The deal sees Equinor sell 100% interest in and operatorship of its onshore assets in the Appalachian Basin, located in southeastern Ohio. This is in exchange for 40% of EQT’s non-operated working interest in the Northern Marcellus shale formation in Pennsylvania.

Details of the deal

Equinor will pay a cash consideration of US$500 million to EQT to balance the overall transaction, swapping for resources that contribute to growing cashflows and further reducing CO2 emissions intensity in its international portfolio.

Upon transaction completion, Equinor will increase its average working interest from 15.7% to 25.7% in certain Chesapeake-operated Northern Marcellus gas units. And to cover pre-existing gas sales commitments, it will enter a gas buy-back agreement with EQT.

Boost for Equinor’s US gas interests

Philippe Mathieu, Equinor’s Executive Vice President for Exploration and Production International, confirmed the deal would continue to “high-grade the US portfolio” and improve profitability by strengthening the firm’s 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,” he said.

“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 (in the) US.”

Building on a core market

Equinor’s US business has recorded US$ 11 billion in earnings since 2020. Prior to this latest transaction, the Appalachian Basin operated position was the last remaining operatorship held by the Scandinavian company in the US onshore.

EQT Corporation, meanwhile, is the largest producer of natural gas in the US with operations in Pennsylvania, West Virginia and Ohio. Final completion of its deal with Equinor will, among other things, be dependent on approval by relevant authorities.

Mathieu added: “The US is a core area for Equinor where we’re building a broad energy business within offshore and onshore oil and gas, offshore wind, and new low-carbon value chains.”