Among the many things I have been working on, subtly is high on my list (sic. it has been pointed out I spelled the key phrase in this sentence incorrectly which simply underscores the fact I’m not likely to make progress on this… ever).  But, like my drinking, my dad bod, and my level of empathy for stupid people… we haven’t really made a lot of progress in 2020.  But seriously, I do realize that if I want to have guests on the podcast, I can’t call out the ‘Terminator’ pad, or question why an oil and gas company would have a lawyer for a COO, or generally question the approval process of how you get a 24 well pad approved when I could have told you it was the dumbest idea EVER (as a random, not specific, name changed example that came to mind) and have their executive team want to come on the podcast.  I would wait until AFTER they sold to mention that explicitly, even though those who have read me for a long time know that’s exactly what I thought.  But I digress, company’s have reasons for doing stupid things… right?

When it comes to the podcast, I’m a nice guy, the interviews allow people to explain how they see the world, and if they look smart chatting to me.. well, it will make people like them more.  So it’s win-win (Toby, I’m talking directly to you now, obviously.)

So, with all that as background, you can understand why maybe I didn’t come out last week and say “EQT for CNX, that makes no F@&KING sense and I totally, utterly don’t believe it. No way Toby is doing that deal.”  As it turns out “the sources familiar but didn’t want to be named” were saying C-V-X…. not C-N-X.  Usually, 66% gets you through high school, but in the mergers and acquisitions business, it gets you a hard fail.  EQT for CVX DOES, in fact, make a lot of sense.  I don’t have the details of course- it’s a private, cash transaction with an equity raise and the remainder in debt.  I like the combination, as had been rumored (for real this time) for a while (with thanks to ShaleProfile Analytics, as always for their generous support of the #hottakeoftheday).

For Chevron, getting the deal done with Noble and leveraging their international portfolio while laying off 15% of of the CVX staff (I assume most were Appalachia) and letting go of 25% of Noble (I assume mostly back office), getting rid of the rounding error for their portfolio in the N.E. makes a lot of sense.  For EQT, it’s pure G&A and asset leverage, with an equity raise at a reasonable equity price for them and the remainder in debt, which for their balance sheet, is reasonable.  This is the definition of a win-win, not to mention EQT has a strong story about improving CVX’s well performance.

So.  THIS deal, I like.  Was I subtle enough that I want to have Toby Rice on the show?

Love and gentle, socially distanced hugs.

DRW