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EQT Corp. (EQT) Expects 2H20 Free Cash Flow to Reach $130M

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EQT Corporation (EQT - Free Report) recently provided an upbeat investor presentation, despite the prevailing weakness in the energy industry. The company not only foresees a rise in cash flow, but also expects the balance sheet to improve.

It expects free cash flow of $130 million in second-half 2020. Earlier, the company provided full-year 2020 fee cash flow guidance in the range of $250-$350 million. In the first half of the year, it recorded free cash flow of $168.5 million, reflecting a rise from the year-ago comparable figure of $90.6 million. Moreover, improving commodity fundamentals are expected to drive the company’s 2021 free cash flow higher than the 2020 level.

The natural gas producer is strategically executing volume curtailments to enhance net asset value amid the current market uncertainties. It curtailed around 425 million cubic feet of natural gas per day of net production on Sep 1, 2020. Also, EQT Corp.’s hedging position is expected to protect the company from in-basin price weakness. It is systematically adding hedges to further reduce risk from price fluctuations.

As of Jun 30, 2020, the company had total debt of $4,620.3 million, which declined from the first-quarter level of $5,036.9 million. It expects management to keep improving the debt level in the coming days. Notably, it received the remaining $202 million tax refund last July. Moreover, EQT Corp. is targeting to reduce total debt to $3.5-$3.7 billion by the end of 2021.

The company is also actively managing its liquidity position. At second quarter-end, it had $1.7 billion in current liquidity. Moreover, the company had $2.5 billion under the unsecured revolver facility. Importantly, its liquidity position is expected cover near-term maturities.

Despite upbeat expectations, the current weak pricing scenario of natural gas is concerning. Being a leading natural gas producer, low commodity price is hurting the company’s business. In fact, it reported second-quarter 2020 adjusted loss of 18 cents per share, wider than the Zacks Consensus Estimate of a loss of 15 cents due to a year-over-year decrease in commodity price realizations and lower production volumes. Moreover, the Zacks Consensus Estimate for third-quarter loss per share is 23 cents, indicating a 283.3% year-over-year decline.

Price Performance

EQT Corp.’s shares have lost 9% in the past month compared with 14.2% decline of the industry it belongs to.

Zacks Rank & Stocks to Consider

EQT Corp. currently has a Zacks Rank #4 (Sell). Some better-ranked players in the energy space include Concho Resources Inc. (CXO - Free Report) , EOG Resources, Inc. (EOG - Free Report) and Murphy Oil Corporation (MUR - Free Report) , each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Concho Resources’ bottom line for 2020 is expected to surge 34.4% year over year.

EOG Resources’ sales for 2021 are expected to increase 18.8% year over year.

Murphy Oil’s bottom line for 2021 is expected to rise 27.6% year over year.

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