As the Appalachian Basin prepares for its next natural gas growth cycle, industry schemes suggest smarter may trump bigger. EQT Corp. may be banking on both.
The gas giant is getting bigger as the U.S. natural gas sector gears up for an expected surge in demand, fueled by LNG growth and AI-powered data centers.
The Pittsburgh-headquartered company has completed five upstream deals since 2019, with its latest being its $1.8 billion acquisition of upstream and midstream assets from Blackstone-backed E&P Olympus Energy. During that time, the operator grew its production to about 8 Bcf/d (6.5 Bcf/d net), lowered its costs by 30% and nearly doubled its free cash flow per share while integrating each acquisition into what Sarah Fenton, executive vice president of EQT’s upstream operations, called a “deal integration machine that learns.”
Each deal brings an opportunity to learn what other operators have done better and to make that part of the company’s standard design, according to Fenton.
Take the Olympus bolt-on as an example.
“Olympus had a few more reps at the bench when it came to the Deep Utica, and they had some proven well designs and some new methods that are actually best practices that we’re picking up,” Fenton said during Hart Energy’s DUG Appalachia Conference & Expo. “As part of our deal integration machine, we track best practices. Things are pretty good at EQT, but not everything’s perfect.”
She referred to Olympus’ approach to managed pressure drawdown, targeting 10 psi to 20 psi per day for initial drawdown for the Deep Utica assets to maintain connectivity and be gentle on the reservoir as it starts to relax.
“That was a best practice that we flagged, and it’s already part of our well design now for our deep Utica well type,” she said.
From longer laterals to revamped drawdown strategies, EQT’s ability to absorb, adapt and apply learnings at scale may be its most valuable asset.
From core to more
The Appalachian pure play is primarily focused on the dry gas Marcellus Shale, where it is the largest natural gas producer. With about 1 million undeveloped core net acres and about 30 years of derisked inventory, Fenton said EQT drills its best rock first. She called the economics in the Marcellus “unrivaled” and repeatability “wonderful.”
“Certainly, through all the acquisitions that we’ve done, we start to pick up even better assets. Like the most recent one with Olympus, we’ve been hearing a lot about the Deep Utica, which is exciting, but its Marcellus is fantastic,” Fenton said. “Tug Hill also got us down into West Virginia and that’s where we start to get the dual gas windows, stepping into some of the condensate and the natural gas liquids. So, for us it’s about the economic component but also the runway and what it does for unlocking other inventory in the area.”
Where possible, EQT goes for combo developments, looking to improve capital efficiency and well productivity with its standard well design that evaluates about 50 to 60 parameters seen as important to standardization.
“What we love about the well design is it allows us to have a standard approach to analysis, a standard approach to planning, a standard approach to cost estimating—all things that go into being really, really efficient,” she said. “We don’t just do one or two pads at a time or one or two wells. We go big or go home baby.”
For EQT, going big means putting two, three, four or five pads together. That’s 10 to 40 wells together to “mow the lawn,” as Fenton put it, to maximize deliverability of the reservoir, minimize parent-child interaction and leverage its scale to drive operational and cost efficiency.
She added laterals of more than 3 miles are normal for EQT. “For us to leverage the combo development with the longer laterals, we just get cheaper per foot.”
Positioning for demand growth
Another differentiator for EQT is its vertical integration with midstream assets.
The company in 2024 closed a $5.45 billion acquisition of Mountain Valley Pipeline (MVP) owner Equitrans Midstream. It added midstream assets in 2023 through a deal with XcL Midstream.
“We’re now vertically integrated, and I think for any engineer operations person in the room, like myself, separating midstream from upstream was just silly from an operational perspective,” Fenton said. “The supply comes from upstream, which feeds the infrastructure. When we got Equitrans back, one of the things that was pretty amazing is we’re all under one common set of goals, especially around capital efficiency.”
To date, EQT has deployed about a dozen pressure reduction projects, contributing to a 20% uplift on that base production, Fenton said.
“That uplift directly translates into less wells. So now I’m preserving inventory and still delivering that same amount of gas that I needed to, but much more capitally efficient,” she said.
The compression projects are more capitally efficient than drilling new wells, she added. “It’s a great opportunity for us to really realize those synergies and get those line pressures down.”
Additionally, MVP Boost and MVP Southgate “gives us optionality for growth into premium markets, which is always exciting for upstream.”
The MVP Southgate pipeline expansion project has a targeted in-service date of mid-2028, with MVP Boost entering service about a year later.
Combined, the upstream and midstream moves position EQT to capture the coming wave of demand from LNG and AI. EQT will be the exclusive natural gas supplier for the 4.4-gigawatt natural gas power plant at the Homer City Energy Campus in Pennsylvania, which will fuel an AI data center complex. Key investors in the $90 billion initiative for data centers, energy and power infrastructure include Blackstone, Google and CoreWeave, among others.
Growing into the natural gas commitment will be about timing, Fenton said, and being ready to meet demand.
“We fully intend to grow into them,” she said of the gas commitments. “Again, it’ll be with our molecules and our infrastructure. So, planning and understanding not only the science component, so what it’s going to take to unlock some of these non-core assets, but also the discovery component. So, building in the inventory for that. That’s already working behind the scenes in the pipeline to feed these new deals.”