Activist investors have seized control of EQT, the largest U.S. natural gas producer, following an overwhelming shareholder vote that resulted in changes of CEO, chairman, general counsel and 7 of the company’s 12 board seats, Bloomberg reports.
The seizure was as much about the fiscal viability of shale fracking as it is about Pittsburgh-based EQT, with new management basing most of its argument on using tech to improve drilling efficiency.
Brothers Toby and Derek Rice, the activist investors, who sold their company to EQT about two years ago and together own 3% of the explorer’s shares, won seven seats on the 12-member board. At its first meeting Wednesday, the new board named Toby Rice president and chief executive officer. John McCartney was elected chairman, and William Jordan was appointed general counsel, replacing Jonathan Lushko. All the elected directors won more than 80% of the votes cast.
“The shareholders provided overwhelming support to us,” Toby Rice, 37, told reporters after the meeting. “One of the key focuses of our campaign was changing out leadership, and that starts with the CEO.”
The dissidents’ victory in the nine-month battle for EQT highlights the urgency for shale producers to demonstrate that they can translate drilling success into shareholder returns. While gas explorers have been remarkably adept at ramping up output and turning the U.S. into a net exporter, their track record of doing so profitably has been spotty at best. Gas prices haven’t helped: They’ve languished near 1990s-era lows amid record production.
EQT became the industry leader via its 2017 purchase of Rice Energy, and Rice’s co-founding brothers led the activist group. The brothers hold around a 3% stake in EQT.