We are investigating EQT Corporation (EQT) (“EQT” or the “Company”) for potential violations of the federal securities laws.
On June 19, 2017, EQT announced entry into an agreement to acquire Rice Energy Inc. (“Rice”) for total consideration of $6.7 billion (the “Acquisition”). EQT touted the purported benefits of the proposed merger, telling its shareholders that the Acquisition would result in $2.5 billion in synergies, including $100 million in cost savings in 2018 alone. On July 3, 2017, activist investor JANA Partners LLC (“JANA”), in several letters citing detailed evidence, asserted that the Rice merger synergies were “grossly exaggerated” and that according to JANA’s expert analysis, “it would be impossible for EQT to support its claimed synergy drilling plan.” Nonetheless, EQT repeatedly denied JANA’s assertions and reassured investors of the merits of the Acquisition. EQT and Rice shareholders thereafter approved the Acquisition. After the Acquisition closed in November 2017, EQT continued to tout the “significant operational synergies” or the merger that would purportedly allow EQT to become “one of the lowest-cost operators in the United States.” On March 15, 2018, just five months after the Acquisition closed, EQT announced the sudden and unexpected resignation of Steven T. Schlotterbeck as the Company’s Chief Executive Officer. Then, on October 25, 2018, EQT reported surprisingly bad third-quarter financial results caused by a significant increase in total costs, which were $586.2 million higher than in the same period of the prior year. Moreover, EQT disclosed that its estimated capital expenditures for well development in 2018 would increase by $300 million, to $2.5 billion, as a result of “inefficiencies from higher activity levels, the learning curve on ultra-long horizontal wells, and service cost increases.” As a result, EQT reduced its full-year forecast for 2018. These disclosures were at odds with EQT’s prior representations concerning the purported synergies of the Acquisition. On this news, EQT’s stock price fell $2.79 per share, or 12.65%, to close at $19.24 per share on October 25, 2018.