EQT, the largest US natural gas producer, plans to write down the value of its assets by as much as $1.Sbn as prices for the fuel slide to the lowest levels in a generation. The Pittsburgh-based company surpasses energy majors such as ExxonMobil and Chevron in gas volumes, according to the latest Natural Gas Supply Association reports. Following a proxy campaign backed by activist investors D E Shaw and Elliott Management, EQT last year installed Toby Rice as chief executive and replaced most of its board. Mr Rice and his brother had sold Rice Energy to EQT in 2017.
The company, with an equity value of $2.1bn, is based in the gas rich Appalachian region in the eastern US. Production there has risen by almost half in the past three years to 33.5bn cubic feet per day, according to the Energy Information Administration. Robust supply and a balmy winter heating season have driven gas prices at Pennsylvania’s Dominion South hub down to $1.83 per million British thermal units, according to data from Intercontinental Exchange.
EQT is the latest exploration and production company buffeted by poor returns from Appalachia assets. When Chevron took a charge of more than $1obn last month, more than half of it was related to gas resources in Appalachia.
Range Resources, another leading producer in the region, last week suspended its dividend to work on paying down debt. It also offered $55om in bonds to refinance bonds coming due next year.
Lower gas prices and investor pressure have led to a drilling slowdown. Last week, 51 rigs were drilling for gas across the Marcellus and Utica shales – the main hydrocarbon formations in Appalachia – down from 79 a year ago, according to Baker Hughes, the oilfield service company.