May 6 (Reuters) - EQT Corp (EQT.N), the largest U.S. natural gas producer, said on Thursday it will buy Appalachian basin rival Alta Resources for $2.93 billion in cash and stock, expanding its position in the gas-rich shale plays of the U.S. northeast.
Dealmaking in the oil and gas space has been heating up as crude prices have jumped on a vaccine-led recovery in travel demand. Natural gas, in particular, hit record highs earlier in February when a winter storm swept parts of the United States.
Shale operators have also been pitching bigger scale as a way to reduce costs in the aftermath of last year's coronavirus-led energy downturn.
The deal with Alta follows EQT's announcement in October to buy oil major Chevron Corp's (CVX.N) Appalachian assets for $735 million. Towards the end of last year, the company had also reportedly made a failed bid to takeover rival CNX Resources Corp (CNX.N).
EQT, which on Wednesday reported a better-than-expected 30 cents profit for the first quarter, said it will pay $1 billion to Alta in cash and the rest in stock.
The company also said that the deal, which adds around a billion cubic feet equivalent gas production to its portfolio, is expected to add to its free cash flow by $2 billion through 2026.
EQT expects the cash flow boost, as much as $400 million annually, to help pay down debt and cut leverage to a near-term target of below two times earnings.
Founded in 1999, Alta counted shale pioneer George Mitchell as a partner before his death in 2013 and is now headed by its founder Joseph Greenberg. It controls 300,000 core net acres in the Marcellus shale formation in northeast Pennsylvania.
Alta is owned by its management and a group of investors. Private equity firm Blackstone Group Inc (BX.N) committed up to $1 billion in 2011 to back Alta, according to a statement at the time.
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