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EQT Earnings Shine, Outlook Bright

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EQT Corporation’s (EQT - Free Report) second quarter 2013 adjusted earnings increased to 57 cents per share from 21 cents in prior-year quarter and surpassed the Zacks Consensus Estimate of 55 cents. The year-over-year increase was primarily attributable to increases in production sales, prices, gathered volumes, and transmission capacity sales and throughput.

Net operating revenue in the quarter was $520.1 million, ahead of the Zacks Consensus Estimate of $485.0 million and above the year-ago number of $337.8 million.
Segment Details
EQT Production's second quarter operating revenues increased 93% year over year to $306.1 million. The growth came from a 54% increase in sales volume and higher average effective price, partially offset by an increase in operating expenses. Operating income increased from $17.7 million a year ago to $105.1 million.
Under the EQT Midstream segment, revenues rose 21.3% year over year to $131.3 million in the reported quarter. Of this, net gathering revenues surged 21% year over year to $87.0 million, owing to 50% growth in gathered volumes. Net transmission revenue increased 81% year over year to $38.8 million. Net storage, marketing and other operating revenue fell $9.2 million year over year to $5.5 million, owing to lower margins and reduced activity. Operating income rose $12.5 million year over year to $72.2 million.
EQT Distribution’s net operating revenue increased $1.1 million year over year to $32.3 million. The segment generated operating income of $6.2 million versus $6.4 million a year ago.
The company’s operating cash flow was $316.7 million during the quarter, reflecting an increase of 90.8% year over year.
EQT’s capital expenditure totaled $499 million, with $398.1 million spent on EQT Production, $91.3 million on EQT Midstream and $9.6 million on EQT Distribution.
The company has increased its full-year production sales volume guidance to 360–365 Bcfe, which is 40% higher than 2012. It also raised its 2013 NGL volume guidance to 4,800–5,000 Mbbls.

The company holds a Zacks Rank #2, which translates to a short-term Buy rating. However, there are other Zacks Ranked #1 (Strong Buy) stocks – VOC Energy Trust , Blueknight Energy Partners, L.P. and Memorial Production Partners LP , – in the oil and gas sector that are expected to outperform the market in the coming one to three months.


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