EQT agrees to buy Range Resources in $13bn all-stock natural gas deal

What happened

The Financial Times (FT) reported that EQT is buying Range Resources in a natural gas megadeal, and the two companies confirmed the merger on Monday, October 26. Each Range share will be exchanged for 0.987 EQT shares, with no cash involved. Reuters calculated that this values Range's equity at about $12.83 billion, or $54.91 a share, a 20.6% premium to Friday's close. After the deal, EQT's current owners would hold about 73% of the group and Range's about 27%. Counting debt, the combined business is worth more than $50 billion. Range shares rose about 15% on the news, while EQT fell 3.7%. Closing is targeted for the first quarter of 2027.

What it means

Both companies drill for gas in the Appalachian Basin, the shale region around Pennsylvania. Put together, they would pump more than 9 billion cubic feet equivalent of gas a day. Their land covers nearly 3 million net acres, enough for over three decades of future wells, alongside more than 3,700 miles of pipelines and other midstream assets, according to the joint release. Reuters noted that rival Expand Energy expects 2026 output of 7.4 to 7.6 billion cubic feet equivalent a day, so the merged company would be clearly ahead.

The logic is a wager on demand. The US Energy Information Administration expects domestic gas use to climb from 91.9 billion cubic feet a day in 2025 to 94.3 billion in 2027, driven by liquefied natural gas (LNG) exports and electricity for AI data centers, Reuters reported. On a call with analysts, EQT chief Toby Rice raised his estimate of possible Appalachian gas demand to 25 billion cubic feet a day, from 20 billion before.

Cost is the other pillar. EQT expects $325 million of yearly savings within two years, rising to more than $600 million over time through better drilling plans, shared infrastructure and stronger marketing of gas and natural gas liquids. It says the deal should cut its unlevered free cash flow breakeven, the average gas price it needs to cover spending before debt costs, to below $2 per million British thermal units. That matters because gas prices swing a lot, and a lower breakeven helps a producer stay profitable when they fall.

Because the deal is paid entirely in stock, Range investors keep a stake in the larger company instead of cashing out. EQT's slip on the day reflects the other side of that trade: its owners are giving up a slice of the business and paying a premium. The merger still needs regulatory clearance and votes from both sets of shareholders. A filing shows Range would owe EQT a $423 million break fee in certain cases, while EQT would owe Range $1.148 billion.

The bull case

Scale and low costs could make the combined EQT the go-to supplier for utilities, LNG exporters and data center developers looking for long-term contracts. The company projects roughly $20 billion of cumulative free cash flow over five years at recent futures prices, plus hundreds of millions in yearly savings. A William Blair analyst said the deal leaves EQT well placed to gain if gas prices eventually recover.

The bear case

The promised savings are targets, not certainties. EQT holders are also diluting their stake to pay a premium of about 20%, and the stock fell on the news. The deal also concentrates more of EQT's fortunes on one basin and on gas prices. Regulators could take time, with the outside deadline stretching into 2028 in some cases, and demand forecasts tied to data centers may prove too optimistic.