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EQT Corp Provides Q2 Estimates, Volume & Efficiency to Improve

Zacks Equity Research

EQT Corporation EQT recently announced that second-quarter sales volumes are estimated to be at the higher end of the previously provided guidance range of 355-375 billion cubic feet equivalent (Bcfe). In comparison, the natural gas producing company recorded 362.5 Bcfe of sales volume in the year-ago period.

EQT Corp intends to become the most efficient and low-cost operator in the upstream industry. The company expects to achieve incremental $25 million drop in annual capital expenditure, which is close to its 10% savings target. This will likely result in cumulative adjusted free cash flow of $3 billion in the 2019-2023 time period. The company is expected to generate adjusted free cash flow of $3.4 billion, provided it reaches the 10% target.

Efficiency Gain

In operations, the pure-play Appalachian explorer was able to reduce drilling days per 1,000 feet by 8% from the March quarter. It is expected to record a 20% efficiency gain in frac stages per crew from the last reported quarter. The drilling team is expected to surpass the 3,000,000 feet drilling mark, operating 100% remotely, and become one of the first land-based U.S. operators to achieve this feat. 

The gain in efficiency is expected to enable the company to reduce operating expenses, which skyrocketed 171% through 2018, in turn hurting the bottom line. Even in the first quarter, its operating expenses improved on a year-over-year basis. Lower operating expenses, coupled with its increasing year-over-year sales volume in the ongoing quarter, will surely lead to earnings improvement. As such, we are of the opinion that the company is well positioned to beat earnings estimates in the second quarter.

The prediction is also supported by our model, which shows that it has the right combination of two key ingredients: a positive Earnings ESP and a Zacks Rank #3 (Hold). Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, stands at +186.36%. Earnings ESP is a very meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. Notably, the company beat estimates in each of the trailing four quarters, with the average being 11.8%.

EQT Corporation Price and EPS Surprise

EQT Corporation Price and EPS Surprise

EQT Corporation price-eps-surprise | EQT Corporation Quote

Key Picks

Some better-ranked players in the energy space are Montage Resources Corporation MR, Approach Resources Inc. AREX and Earthstone Energy, Inc. ESTE. While Montage Resources sports a Zacks Rank #1 (Strong Buy), Approach Resources and Earthstone Energy hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  

Montage Resources’ sales growth is projected at 27.6% through 2019.

Approach Resources surpassed earnings estimates in three of the trailing four quarters, with the average positive surprise being 12.7%.

Earthstone Energy’ sales growth is projected at 15% through 2019.

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EQT Corporation (EQT) : Free Stock Analysis Report
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