(Reuters) -EQT Corp said on Monday it has decided to buy back its former unit Equitrans Midstream in an all-stock deal to create an integrated natural gas firm valued at more than $35 billion.

Shares of Equitrans jumped more than 8% in premarket trading, while EQT was down about 1%.

The news was first reported by WSJ earlier on Monday.

The deal comes at a time when U.S. natural gas producers are curbing their output and spending on drilling activity as an oversupplied market has brought the prices of the commodity down to multi-decade lows.

The transaction closely follows rival Chesapeake Energy's $7.4 billion bid for Southwestern Energy in January.

Equitrans is the lead partner and operator of the Mountain Valley natural gas pipeline, the only big gas pipeline under construction in the U.S. Northeast. It has encountered numerous regulatory and court fights that have stopped work several times since construction began in 2018.

It is the former pipeline business of EQT, which was spun out when the company in 2018 split into two, separating its midstream operations from the gas production business.

EQT is the largest U.S. natural gas producer has operations focused in the cores of the Marcellus and Utica Shales in the Appalachian Basin.