EQT Corp (EQT) Stock Declines 6.5% Despite Q3 Earnings Beat
EQT Corporation EQT shares fell 6.5% despite reporting strong third-quarter 2021 results on Oct 27. Investors are concerned over the company’s $3.3-billion loss in the third quarter on derivatives. Uncertainty in the upstream business, as the coronavirus pandemic is far from over, is also hurting investors’ sentiments.
The company reported adjusted earnings from continuing operations of 12 cents per share, beating the Zacks Consensus Estimate of a loss of 5 cents. The bottom line turned around from the year-ago quarter’s loss of 15 cents.
Adjusted operating revenues increased to $1,155 million from $853.2 million in the prior-year quarter. The top line surpassed the Zacks Consensus Estimate of $1,119 million.
The solid third-quarter results can be attributed to increased production volumes and higher realizations of commodity prices.
EQT Corporation Price, Consensus and EPS Surprise
EQT Corporation price-consensus-eps-surprise-chart | EQT Corporation Quote
Q3 Operations
Production
Sales volumes increased to 495 billion cubic feet equivalent (Bcfe) per day from the year-ago figure of 366.1 Bcfe. Natural gas sales volume was 464.6 Bcf for the third quarter, up from 348.1 Bcf a year ago. Total liquids sales volume for the quarter was recorded at 5,074 thousand barrels (MBbls) versus the year-ago period’s 3,001 MBbls.
Commodity Price Realizations
The average realized price was $2.33 per thousand cubic feet of natural gas equivalent (Mcfe), in line with the year-ago quarter level. Natural gas price was recorded at $4.2 per Mcf, up from the year-ago level of $2.08. Further, the oil price was recorded at $46.79 per barrel, up from $24.43 in third-quarter 2020. Also, the ethane sales price was recorded at $9.22 per barrel for the third quarter, higher than the year-ago level of $2.94.
Expenses
Total operating expenses were $1.25 per Mcfe for the third quarter of 2021, down from $1.43 in the prior-year period.
Processing expenses were 10 cents per Mcfe, up from the year-ago period’s 9 cents. Gathering expenses were down to 64 cents per Mcfe from 75 cents a year ago. Lease operating expenses also declined to 6 cents from the year-ago level of 8 cents. Further, transmission costs decreased to 26 cents per Mcfe from the year-ago level of 33 cents.
Wells Drilled
In third-quarter 2021, the company drilled 15 net wells in the WV Marcellus. It expects to drill seven wells in the fourth quarter. It did not drill wells in SWPA Marcellus in the reported quarter.
Cash Flows
EQT Corp’s adjusted operating cash flow was $396.1 million for the quarter, up from $294.7 million a year ago. Free cash flow for the quarter was $99.1 million, improving from the year-ago free cash outflow of $46.7 million.
Capex & Balance Sheet
Total capital expenditure amounted to $297.7 million for the third quarter, up from $248 million a year ago.
As of Sep 30, 2021, the company had $22.8 million in cash and cash equivalents, significantly down sequentially from $330.8 million. Total debt was reported at $6,189.6 million, up from $5,496.3 million at the second-quarter end.
Guidance
For 2021, the largest natural gas producer of the United States expects total sales volumes of 1,840-1,870 Bcfe, the mid-point of which is higher than the 1,800-1,875 Bcfe mentioned earlier. The company maintains its total per-unit operating costs at $1.22-$1.34 per Mcfe.
Adjusted earnings before interest, taxes, depreciation and amortization are expected to be $2.38-$2.43 billion, up from the previously stated $2.1-$2.2 billion. Capital expenditure for the year is expected to be$1.075-$1.125 billion.
Free cash flow is projected to be $925-$975 million, marking an increase from the previously mentioned $725-$800 million. The company expects to achieve net-zero emissions from Scope 1 and 2 within 2025.
Zacks Rank & Other Stocks to Consider
The company currently has a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the energy space are EOG Resources, Inc. EOG, Antero Resources Corporation AR and Devon Energy Corporation DVN, each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
EOG Resources’ earnings for 2021 are expected to increase 21.7% year over year.
Antero Resources’ earnings for 2021 are expected to surge 66.6% year over year.
Devon’s earnings for 2021 are expected to jump 59.6% year over year.
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