EQT Corp Beat Earnings With Gain on Natural Gas Prices

EQT Corporation $EQT reported stronger than expected second quarter results Thursday, primarily due to an increase in natural gas prices. EQT acquired Rice Energy last month.

EQT Corporation $EQT reported stronger than expected second quarter earnings.  The gain was primarily due to an increase in natural gas prices.

The average realized price was 36% higher than second quarter 2016 with production sales volume was 7% higher than second quarter 2016. In June EQT Corp  agreed to buy Rice Energy Inc. for $6.7 billion. The EQT buy has the potential to create a Shale powerhouse combining drilling longer horizontal wells to Rice’s prime acreage. 

Earnings: Adjusted earnings per share of 6 cents, beating consensus estimate of 5 cents beating a loss of 35 cents in the prior-year quarter. Revenue in the quarter rose 442% year over year to $690.8 million and over consensus estimate of $631 million.

Reaction: EQT Corporation NYSE: EQT Open 64.57 +0.60 +0.94% 

Net Production 

EQT reported second quarter 2017 net production of 363 Mboe/d, rising by 3% from first quarter 2017 production of 351.7 Mboe/d.

Production by Commodity:
– Natural Gas: 1,842 MMcf/d (+1% Q/Q)
– NGL: 34.55 Mbbl/d (+9% Q/Q)
– Ethane: 17.9 Mbbl/d (+39% Q/Q)
– Crude Oil: 3.17 Mbbl/d (+26% Q/Q)

Rice’s pipeline assets give $EQT the opportunity to bring more of its natural gas to markets. Markets including the  including the Gulf and the ability benefit from benchmark pricing at Henry Hub making for more liquid hedging and trading.

Steve Schlotterbeck, president and chief executive officer, stated, “Significant sales volume growth and an increase in the average realized price contributed to our strong second quarter results. We were also able to ramp up execution of our consolidation strategy by entering into an agreement to acquire Rice Energy.”

Schlotterbeck continued, “Rice is an outstanding strategic and operational fit for us and we anticipate the combined entities will capture significant operating efficiencies, improve overall well economics, and deliver stronger returns to our shareholders. With our asset position in one of the most prolific natural gas basins in the world, we remain confident in our ability to drive both near- and long-term value creation.”

Segments

EQT Production reported second-quarter adjusted operating revenues of $566.1 million, up 45.1% year over year. Adjusted operating loss was $4.2 million, substantially narrower than $118 million loss in the year-earlier quarter. The improvement was mainly driven by higher production sales volumes and average realized commodity prices.

EQT Gathering, net gathering revenue increased 12% year over year to $112.2 million on higher gathered volumes. Operating income rose 14% year over year to $83.3 million in the reported quarter.

EQT Transmission net transmission revenues grew 11.6% to $86.8 million. Operating income jumped 3.4% year over year to $57.8 million in the quarter under review.

Natural Gas Hedges

EQT reported natural gas hedges for the second half of 2017 covering an average of 1,418.5 MMcf/d. EQT’s NYMEX Swaps cover 1,353 MMcf/d at $3.35/Mcf while Collars cover 65.2 MMcf/d at a floor price of $2.06/Mcf and a cap price of $3.93/Mcf.

Largest Producer of Natural Gas in America

QT Corp is now primed to become the largest producer of natural gas in the United States. After closing the Rice deal EQT’s output will total 3.6 billion cubic feet per day of natural gas, going ahead of the U.S. production of Exxon Mobil and Chesapeake Energy.

Top U.S. Natural Gas Producers: 
Q1 2017 Production – MMcf/day
1 ExxonMobil 3,011
2 Chesapeake Energy 2,344 
3 Southwestern Energy Co. 2,033
4 Anadarko 1,859 
5 EQT  1,827 
6 Cabot Oil & Gas 1,820 
7 BP 1,594 
8 Antero Resources 1,544 
9 Range Resources 1,292 
10 Rice Energy 1,258 

Source: http://www.ngsa.org/wp-content/uploads/2017/05/First-Q-2017-production.pdf

The RICE buy extends EQT’s reserves in the Marcellus and Utica shale regions. 
Via Market Realist

Quote

“This transaction brings together two of the top Marcellus and Utica producers to form a natural gas operating position that will be unmatched in the industry,” EQT President and CEO Steve Schlotterbeck said in a statement.

Guidance

Production sales volumes for 2017 are projected in the range of 825–840 billion cubic feet equivalent (Bcfe). Liquids volumes are estimated at 19,050–19,650 thousand barrel of oil equivalent (MBBl).

Production sales volumes for third-quarter 2017 are projected at 205–210 Bcfe. Liquids volumes.

Source: EQT, Criterion

Live From The Pit

 

 

 

 

 

Source: EQT, Criterion

Live From The Pit

 

 

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