Equinor ASA ( EQNR ) and EQT Corporation ( EQT ) shares are trading lower after the companies signed an asset sale agreement.

EQT inked a deal with Equinor USA Onshore Properties and their affiliates to sell an undivided 40% stake in its non-operated natural gas assets in Northeast Pennsylvania for $500 million of cash and upstream and midstream assets.

The assets represent around 225 MMcf/d of forecasted 2025 net production.  

The assets EQT will receive in the transaction include ~26,000 net acres in Monroe County, Ohio (2025 net production of ~135 MMcfe/d) and ~10,000 net acres in Lycoming County, Pennsylvania (2025 net production of ~15 MMcfe/d in existing EQT-operated assets).

Based on recent strip pricing, EQT forecasts an aggregate FY25 free cash flow of about $75 million from the non-cash consideration.

The deal is expected to close in the late second quarter of 2024, subject to customary closing conditions. EQT expects no cash tax leakage related to the transaction. 

EQT President and CEO Toby Z. Rice said, “This transaction marks an extremely positive start to our divestiture program, bringing in over $1.1 billion of value, including synergies and development plan optimization, for 40% of our non-operated assets, while retaining gas price upside.” 

Read: EQT Stock Downgraded Despite Merger News: Analyst Says Hold Your Horses

“We plan to opportunistically divest the remaining portion of our non-operated assets in Northeast Pennsylvania and have tremendous confidence in being able to achieve our de-leveraging goals.”  

Investors can gain exposure to the stock via  Invesco S&P 500 Equal Weight Energy ETF and Horizon Kinetics Energy And Remediation ETF .

Also Read: Analyst Sees Volatile Future for North American Gas Prices, Upgrades Most Impacted Stock

Price Action: EQT shares are down 0.91% at $36.91 and EQNR by 0.09% at $28.20 on the last check Monday.