EQT Corp (EQT) Reports Solid 2023 Performance and Provides Optimistic 2024 Outlook
Production: EQT achieved a fourth quarter production of 564 Bcfe, aligning with the high-end of their guidance.
Capital Expenditures: Managed capital expenditures of $539 million, close to the lower end of projections.
Operating Expenses: Cash operating expenses were $1.27 per Mcfe, reflecting operational efficiency and cost management.
Net Income: Reported a net income of $502 million for Q4 and $1.735 billion for the full year.
Free Cash Flow: Generated substantial free cash flow of $236 million in Q4 and $879 million for the full year.
Debt Management: Retired over $1.1 billion of debt, enhancing the company's financial stability.
Reserves: Total proved reserves increased by 10% year-over-year, reaching 27.6 Tcfe.
On February 13, 2024, EQT Corp (NYSE:EQT) released its 8-K filing, detailing the company's financial and operational results for the fourth quarter and full year of 2023, along with guidance for 2024. EQT Corp, a leading independent natural gas production company, focuses on the Marcellus and Utica shales in the Appalachian Basin. The company's strategy revolves around multiwell pad development to efficiently meet supply needs while emphasizing sustainability and technological advancements.
Financial and Operational Performance
EQT Corp's fourth quarter production reached the upper guidance limit, driven by operational efficiency and strong well performance. The company's capital expenditures were near the lower end of guidance at $539 million. Cash operating expenses were maintained at $1.27 per Mcfe, showcasing the benefits of EQTs West Virginia water assets and operational excellence. The company generated $624 million in net cash from operating activities and $236 million in free cash flow during the fourth quarter.
For the full year, EQT Corp generated approximately $3.2 billion in net cash from operating activities and $879 million in free cash flow, despite an average NYMEX natural gas price of $2.74 per MMBtu. The company retired $1.1 billion of debt and increased its base dividend by 5%. Operational efficiencies reached new heights, with drilling and completion pace up 6% and 16% year-over-year, respectively. EQT Corp also improved its environmental, health, and safety intensity by 22% year-over-year, surpassing its corporate goal of a 15% improvement.
Debt Reduction and Capital Structure Simplification
EQT Corp retired all outstanding convertible notes, eliminating over $400 million of debt and simplifying its capital structure. The company also monetized a capped call associated with the convertible notes, generating $93 million in cash proceeds. Additionally, EQT Corp priced $750 million of 10-year senior notes at a 1.65% spread to comparable U.S. treasury rates, using the proceeds to pay down a term loan and eliminate approximately $10 million of annual interest expense.
Strategic Acquisitions and Reserves
The company closed on strategic acquisitions of Tug Hill and XcL Midstream, integrating the assets at a record pace for EQT. Total proved reserves increased by 10% year-over-year to 27.6 Tcfe, with a total standardized measure of discounted future net cash flows of $9 billion at SEC pricing or $23 billion PV-10 at recent strip pricing.
2024 Guidance and Outlook
Looking ahead to 2024, EQT Corp expects total sales volume of 2,200 2,300 Bcfe and plans to spend $1,950 $2,050 million on maintenance capital expenditures. The company also anticipates investing $200 $300 million in strategic growth capital expenditures. With an advantaged hedge position, EQT estimates a 2024 NYMEX Henry Hub free cash flow breakeven price of approximately $2.20 per MMBtu.
Coming into 2023, we set our overarching corporate mission and goal for the year with two simple words, 'Peak Performance.' I wanted our fourth year at EQT to be our best one yet, and the Qrew certainly came through in delivering on that mission," said President and CEO Toby Z. Rice.
EQT Corp's achievements in 2023, including significant free cash flow generation, debt reduction, and operational efficiencies, position the company for continued success in the coming year. The company's focus on maximizing operational efficiency and sustainability, coupled with its strategic investments and debt management, signal a robust outlook for 2024.
For a detailed analysis of EQT Corp's financials and operational performance, investors and interested parties can access the full earnings report and additional information on the company's investor relations website.
Explore the complete 8-K earnings release (here) from EQT Corp for further details.
This article first appeared on GuruFocus.
