March 11 (Reuters) - EQT Corp ( EQT ) has decided to buy

back its former unit Equitrans Midstream ( ETRN ) in an

all-stock deal to create an integrated natural gas provider

valued at more than $35 billion, the companies said on Monday.

Shares of Equitrans jumped more than 8% in premarket

trading, while EQT was down about 1%.

Under the terms of the merger agreement, each outstanding

share of Equitrans common stock will be exchanged for 0.3504

shares of EQT stock, representing a value of $12.50 per

Equitrans share.

The transaction is expected to close during the fourth

quarter of 2024.

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 ( CHK )

$7.4 billion bid for Southwestern Energy ( SWN ) in

January.

"As we enter the global era of natural gas, it is imperative

for U.S. natural gas companies to evolve their business models

to compete on the global stage against vertically integrated

rivals," EQT CEO Toby Rice said in a statement.

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, which has

operations focused in the cores of the Marcellus and Utica

Shales in the Appalachian Basin.

The deal was first reported by Wall Street Journal earlier

on Monday.