We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
EQT Corp. to Expand in Marcellus & Utica, Debt a Concern
Read MoreHide Full Article
On Jun 23, we issued an updated research report on energy player EQT Corporation (EQT - Free Report) . The company has a significant presence in the prospective Marcellus play and will likely boost its footprint further in the shale resources following the acquisition of Rice Energy Inc. . The buyout will help boost the company’s natural gas production significantly. However, EQT Corp.’s sole exposure to Appalachian Basin is a concern.
The company’s business primarily entails production, gathering and transportation of natural gas. Natural gas is known for producing significantly less CO2 – a major pollutant – when burned to produce heat or power. With natural gas’ demand set to grow, we expect the company to generate significant cash flow from operations.
Recently, in a landmark deal, EQT Corp. decided to acquire Rice Energy for a total consideration of $6.7 billion. With the completion of the deal, the upstream companies will create the largest natural gas producer in the U.S. Most importantly, the acquisition will significantly raise EQT Corp.’s core acreage positions in the Marcellus and Utica shale plays. Post acquisition, the average sales volumes of natural gas for EQT Corp. will surge to 3.6 billion cubic feet equivalent per day (Bcfe/D) from 1.3 Bcfe. Also, the transaction will help the combined entity lower operating cost and realize cost synergy of $2.5 billion.
Investors should know that the acquisition will likely increase EQT Corp.’s footprint in the Marcellus shale play to 670,000 net acres from 187,000 net acres. Also, total undeveloped locations in the region will jump to 3,700 from 980. In the Pennsylvania & West Virginia Utica resources, the acquisition is anticipated to raise the core presence of EQT Corp. from 105,000 net acres to 616,000 net acres. Additionally, undeveloped areas will increase to 3,680 from 630.
However, the persistently low commodity prices have been affecting the business of upstream energy players like Abraxas Petroleum Corporation (AXAS - Free Report) and Apache Corporation (APA - Free Report) . The same risk is applicable to the upstream business of the company.
Moreover, in the last one year, the firm has underperformed the Zacks categorized Oil & Gas-U.S Exploration & Production industry. During the aforesaid period, EQT Corp.’s stock lost 32.2%, wider than the broader industry’s decline of 23.4%.
Also, as of Feb 8, 2017, Moody’s Investors Services has rated the long-term debt of EQT Corp. as “Baa3” and Standard & Poor’s Ratings Service (S&P) rated the same as “BBB”. It is to be noted that “Baa3” is the lowest grade investment rating of Moody’s while “BBB” is among the lower investment grade ratings. If there is further downgrade of ratings following weak oil and gas prices it will be difficult for the company to raise capital on favorable terms for financing growth projects.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 ""Strong Buys"" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 ""Strong Sells."" Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
EQT Corp. to Expand in Marcellus & Utica, Debt a Concern
On Jun 23, we issued an updated research report on energy player EQT Corporation (EQT - Free Report) . The company has a significant presence in the prospective Marcellus play and will likely boost its footprint further in the shale resources following the acquisition of Rice Energy Inc. . The buyout will help boost the company’s natural gas production significantly. However, EQT Corp.’s sole exposure to Appalachian Basin is a concern.
The company’s business primarily entails production, gathering and transportation of natural gas. Natural gas is known for producing significantly less CO2 – a major pollutant – when burned to produce heat or power. With natural gas’ demand set to grow, we expect the company to generate significant cash flow from operations.
Recently, in a landmark deal, EQT Corp. decided to acquire Rice Energy for a total consideration of $6.7 billion. With the completion of the deal, the upstream companies will create the largest natural gas producer in the U.S. Most importantly, the acquisition will significantly raise EQT Corp.’s core acreage positions in the Marcellus and Utica shale plays. Post acquisition, the average sales volumes of natural gas for EQT Corp. will surge to 3.6 billion cubic feet equivalent per day (Bcfe/D) from 1.3 Bcfe. Also, the transaction will help the combined entity lower operating cost and realize cost synergy of $2.5 billion.
Investors should know that the acquisition will likely increase EQT Corp.’s footprint in the Marcellus shale play to 670,000 net acres from 187,000 net acres. Also, total undeveloped locations in the region will jump to 3,700 from 980. In the Pennsylvania & West Virginia Utica resources, the acquisition is anticipated to raise the core presence of EQT Corp. from 105,000 net acres to 616,000 net acres. Additionally, undeveloped areas will increase to 3,680 from 630.
However, the persistently low commodity prices have been affecting the business of upstream energy players like Abraxas Petroleum Corporation (AXAS - Free Report) and Apache Corporation (APA - Free Report) . The same risk is applicable to the upstream business of the company.
Moreover, in the last one year, the firm has underperformed the Zacks categorized Oil & Gas-U.S Exploration & Production industry. During the aforesaid period, EQT Corp.’s stock lost 32.2%, wider than the broader industry’s decline of 23.4%.
Also, as of Feb 8, 2017, Moody’s Investors Services has rated the long-term debt of EQT Corp. as “Baa3” and Standard & Poor’s Ratings Service (S&P) rated the same as “BBB”. It is to be noted that “Baa3” is the lowest grade investment rating of Moody’s while “BBB” is among the lower investment grade ratings. If there is further downgrade of ratings following weak oil and gas prices it will be difficult for the company to raise capital on favorable terms for financing growth projects.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 ""Strong Buys"" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 ""Strong Sells."" Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>