EQT Corporation (EQT, Financial) has entered into a definitive agreement to purchase the upstream and midstream assets of Olympus Energy for $1.8 billion. This strategic acquisition involves approximately 26 million shares of EQT common stock, valued at $1.3 billion based on a 20-day average price as of April 21, along with $500 million in cash. EQT plans to finance the cash portion through current cash reserves and its revolving credit line.
The assets being acquired cover a 90,000 net acre area in Southwest Pennsylvania, adjacent to EQT’s existing operations. This acquisition is expected to add a net production capacity of approximately 500 million cubic feet per day (MMcf/d). EQT anticipates that these assets will contribute an average yearly adjusted EBITDA of $530 million and unlevered free cash flow of $270 million over the next three years, based on April 16 strip pricing. This translates to a favorable adjusted EBITDA multiple of approximately 3.4x and an unlevered free cash flow yield of around 15%.
The transaction has been unanimously approved by EQT's Board of Directors and is scheduled to close early in the third quarter, pending regulatory approvals and standard closing conditions. Moelis & Company acted as the lead financial advisor for EQT, with Greenhill and Vinson & Elkins providing additional financial and legal counsel respectively. Olympus Energy was advised by Jefferies financially and by Kirkland & Ellis legally.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 24 analysts, the average target price for EQT Corp (EQT, Financial) is $55.80 with a high estimate of $73.00 and a low estimate of $36.00. The average target implies an upside of 14.88% from the current price of $48.57. More detailed estimate data can be found on the EQT Corp (EQT) Forecast page.
Based on the consensus recommendation from 26 brokerage firms, EQT Corp's (EQT, Financial) average brokerage recommendation is currently 2.1, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for EQT Corp (EQT, Financial) in one year is $27.40, suggesting a downside of 43.59% from the current price of $48.57. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the EQT Corp (EQT) Summary page.
