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EQT Releases Update on Capex, Production and Operations

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EQT Corporation (EQT - Free Report) has released capital expenditure and production forecasts for 2018.

The company projects capital expenditure for 2018 at $2.4 billion, of which $2.2 billion will be allocated for well development and $150 million for acreage fill-ins and bolt-on leasing. The capex is anticipated to be funded through adjusted operating cash flow attributable to EQT. However, the capex does not include spending for retained midstream assets as well as for EQT Midstream Partners, LP and Rice Midstream Partners LP.

The production sales volume for 2018 is estimated in the range of 1,520-1,560 billion cubic feet equivalent (Bcfe). Liquids sales volume is expected in the range of 13,400-13,800 thousand barrels (Mbbls), while ethane sales volume is projected in the range of 4,900-5,200 Mbbls.

For 2019, EQT projects a 15% increase in production sales volume based on the 2018 drilling program. The 2019 development plan is expected to be financed by the cash flow provided by EQT Production.

In 2018, the company plans to focus on the Marcellus acreage, with a target of 111 wells in Pennsylvania and 28 wells in West Virginia. About 139 wells are planned for drilling in the region, with around 160-17 wells to be turn-in-line (TIL). The rigs to be employed in the region are projected at 10.

In Ohio Utica Development, EQT intends to drill 38 gross (25 net) wells and 40-50 gross wells are expected to be TIL during 2018.

During 2018, EQT proposes to drill 19 Upper Devonian wells and 20-25 wells are expected to be TIL. These wells will be restricted to joint development on Marcellus pads in Pennsylvania.

The merger between EQT and Rice Energy has led to savings of about $45 million. The savings can be attributed to the replacement of lower investment grade debt by Rice Energy’s senior notes worth $1.3 billion.

Earlier this week, EQT turned in line the longest lateral completed to date by any operator in the Marcellus. The Haywood H18 well in Washington County, PA, has a lateral length of 17,400 feet and will develop 42 Bcfe of reserves. In 2018, the company proposes to drill 27 Marcellus wells at 17,000 feet or deeper.

For 2018, adjusted operating cash flow attributable to EQT is estimated in the range of $2,350-$2,450 million, which comprises $325-$375 million from EQT’s interests in EQT GP Holdings, LP and Rice Midstream Partners.

In 2018, selling, general and administrative (SG&A) expenses as well as depriciation, depletion and amortization (DD&A) are estimated in the range of 10-12 cents and $1.16-$1.18 per unit, respectively.

Price Performance

Shares of the company have lost 12.4% against the industry’s rally of 8.1% in the last three months.



 

Zacks Rank & Key Picks

EQT carries a Zacks Rank 3 (Hold). A few better-ranked players in the energy sector include Holly Energy Partners, LP (HEP - Free Report) , SunCoke Energy Inc (SXC - Free Report) and Northern Oil and Gas Inc (NOG - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Holly Energy Partners, owner and operator of refined product pipelines and terminals, delivered an average positive earnings surprise of 57.14% in the preceding quarter.

SunCoke Energy produces metallurgical coke in the United States. The company delivered an average positive earnings surprise of 113.52% in the last four quarters.

Northern Oil and Gas, based in Minnetonka, MN, is an independent energy company. The company delivered an average positive earnings surprise of 175.00% in the last four quarters.

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