EQT Is Building a $50 Billion Natural Gas Giant as AI Power Demand Surges

Everyone knows AI runs on chips. Far fewer people ask what runs these power-hungry data centers. According to a Rabobank estimate, U.S. power demand could surge 20% by 2030, a rapid acceleration from its meager 0.5% annual growth rate in recent years. EQT (EQT -3.70%) is making a massive bet that natural gas will play a major role in fueling this power surge.

It’s driving the company to acquire Range Resources (RRC +15.79%) in a deal that will create a $50 billion natural gas giant. Here’s a look at the deal and what it means for the leading natural gas stock.

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Creating America’s natural gas champion

EQT is acquiring Range Resources in an all-stock deal that will create a $50 billion company by enterprise value. Existing EQT shareholders will own 73% of the combined company, while Range Resources holders will own the other 27%. The companies expect the deal to close in the first quarter of 2027.

The combined company will have truly unmatched size and scale. It will become the largest U.S. gas producer at more than 9 billion cubic feet equivalent per day (Bcfe/d), with 88% of its production being natural gas. It will have a peer-leading cost of supply, with an unlevered free cash flow breakeven below $2 per MMBtu. EQT will boast a massive resource base (2.8 million net acres with more than three decades of remaining drilling locations at the current pace) backed by vertically integrated midstream assets (over 3,700 miles of pipelines). Finally, it will have a fortress balance sheet with BBB-rated credit and a low leverage ratio.

Fueling the AI power boom

In the press release announcing the combination, EQT’s CEO, Toby Rice, highlighted that “our expanded resource base solidifies EQT as the operator of choice for premium, long-term supply arrangements and provides unique growth optionality underpinned by contractual demand.” This strategy differentiates EQT from other natural gas producers. Instead of selling all its gas at market prices, the company is starting to strategically lock up long-term supply agreements to power the country’s AI boom.

For example, in the company’s second-quarter earnings press release in July, EQT highlighted its most recent premium power supply deal. The company signed a 10-year agreement with Competitive Power Ventures to supply 325,000 dekatherms of natural gas per day to the CPV Shay Energy Center in West Virginia. The company noted that the deal links pricing to PJM power prices (the country’s largest power grid operator), enabling it to sell its gas at much higher prices than in-basin market prices. That’s one of several deals it has signed to supply gas to directly support growing power demand, largely driven by AI data centers.

Acquiring Range Resources will put EQT in an even stronger position to capture future supply deals. It will have an expanded resource base and even lower supply costs, giving it an even stronger strategic position to capitalize on the AI-driven boom in gas demand.

However, it also makes the company even more susceptible to a potential AI power bust. Companies are pouring billions of dollars into developing AI infrastructure in the hopes this technology will drive meaningful productivity gains. However, surging costs, ballooning debt levels, and growing local opposition could slow growth, impacting future gas demand. That could affect EQT’s ability to create shareholder value from this deal.

Getting bigger and better

EQT is acquiring Range Resources in a transformational deal. It will create the country’s largest gas producer at a time when AI data centers are fueling surging demand. It strengthens the company’s ability to capitalize on new growth drivers, such as gas supply contracts for AI data centers and supporting power plants. That enhances the long-term investment thesis for EQT.