EQT Corp., the biggest producer of U.S. natural gas, is seeking to acquire rival CNX Resources Corp., according to people familiar with the matter, as M&A accelerates in the distressed shale patch. EQT recently sent a takeover proposal to CNX Resources, said the people, who asked to not be identified because the matter isn’t public. No final decision has been made and EQT could opt to not proceed with a potential deal, they said.
The proposal comes as a wave of deals involving other shale companies is shaking up the industry, with investors looking for scale as a way to cut costs and gain more control over supplies. Merger and acquisition activity has been particularly busy in the prolific Permian Basin, which straddles West Texas and southeastern New Mexico. Still, consolidation talks are also picking up for gas producers in Appalachia, where CNX and EQT operations are based.
EQT already is the largest supplier of U.S. gas, producing 44% more than its nearest competitor, Exxon Mobil Corp., according to figures compiled by the Natural Gas Supply Association. EQT pumped about 4 billion cubic feet a day as of the first quarter, while CNX produced 1.38 billion, the data show.
EQT Chief Executive Officer Toby Rice, 38, is pursuing what would be his first deal since he took the top job in July 2019. The Rice family had previously sold their Appalachian gas company, Rice Energy, to EQT in 2017. But they became disenchanted with EQT’s performance and mounted a nine-month proxy fight, vowing to slash costs amid growing investor pressure for cash generation and better returns.