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EQT Corp (EQT) Q4 Earnings Miss Estimates, Revenues Beat
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EQT Corporation (EQT - Free Report) reported fourth-quarter 2019 adjusted loss from continuing operations of 3 cents per share against the Zacks Consensus Estimate of earnings of 9 cents. In the year-ago comparable period, the company reported adjusted profit of 79 cents per share.
Total operating revenues declined to $1,011.5 million from $1,245.1 million in the prior-year quarter. However, the top line beat the Zacks Consensus Estimate of $962 million.
The lower-than-expected earnings were caused by a year-over-year decrease in natural gas equivalent production volumes and lower commodity price realizations, partially offset by decline in total operating expenses.
The company recently made a 15-year gathering agreement with Equitrans Midstream Corporation (ETRN - Free Report) , which pushed the minimum volume commitment level to 3 Bcf per day. The move is expected to boost EQT Corp’s profits by reducing per unit costs in the coming days.
At the end of 2019, the company had proved developed reserves of 12.4 trillion cubic feet equivalent, 7.7% higher than the 2018 level. Of the total, 84.5% was located in the Marcellus region.
Operations:
Production Declines
Sales volume declined to 373.5 billion cubic feet equivalent (Bcfe) of natural gas from the year-ago figure of 393.9 Bcfe. Natural gas sales volume was 357.2 Bcf in the fourth quarter, down from 372.9 Bcf a year ago. Total liquids sales volume in the quarter was recorded at 2,720 thousand barrels (MBbls), lower than the year-ago period’s 3,504 MBbls.
Price Realization Decreases
Average realized price of natural gas equivalents was $2.54 per thousand cubic feet, down from $3.13 in the year-ago quarter. Natural gas price was recorded at $2.64 per Mcf, lower than the year-ago level of $3.86. Oil price was recorded at $36.76 per barrel, significantly down from $46.17 in the fourth-quarter 2018.
Expenses
Total selected operating expenses were $1.37 per unit in fourth-quarter 2019, down from $1.53 in the prior-year quarter.
Notably, processing expenses were 8 cents per thousand cubic feet equivalent (Mcfe) compared with 9 cents in the fourth quarter of 2018. However, gathering expenses rose to 57 cents per Mcfe from 54 cents in the year-ago period. Transmission costs increased to 52 cents per Mcfe from the year-ago level of 46 cents. Lease operating expenses were 6 cents in the quarter, up from 4 cents in the year-ago period.
Wells Drilled
The company spud 30 net wells in the fourth quarter. Of the total, 24 wells were drilled in the PA Marcellus, with the average lateral length being 12,750 feet, and six were drilled in the OH Utica, with the average lateral length being 11,540 feet.
Cash Flows
EQT Corp’s adjusted operating cash flow was $503 million in the quarter, down from $692.6 million a year ago. Free cash flow rose to $147.5 million from $134.2 million in fourth-quarter 2018.
Capex & Balance Sheet
Total capital expenditure amounted to $355.5 million in the fourth quarter, down from $558.4 million in the year-ago period.
As of Dec 31, 2019, the company had $4.6 million in cash and cash equivalents, and $5.3 billion of total debt.
Guidance
In first-quarter 2020, EQT Corp expects to drill net 18 wells in the PA Marcellus and one in OH Utica. It intends to run two-three top-hole rigs in 2020.
It is continuing an asset monetization plan to deleverage its portfolio, which will likely be executed by mid-2020.
The company anticipates total sales volume in the 360-370 Bcfe range for first-quarter 2020. For full-year, it expects total sales volume within 1,450-1,500 Bcfe, indicating a decline from the 2019 level of 1,507 Bcfe.
Total unit costs for 2020 are expected in the range of $1.38-$1.50 per Mcfe. The metric was recorded at $1.44 per Mcfe in 2019.
The company anticipates adjusted operating cash flow in the range of $1.50-$1.60 billion for 2020, suggesting fall from $1.83 billion in 2019. It expects capital expenditure in the band of $1.15-1.25 billion for the year, implying a decrease from $1.77 billion in 2019.
Chevron’s bottom line for 2020 is expected to rise 12.8% year over year.
Hess’ bottom line for 2020 is expected to rise 93.7% year over year.
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EQT Corp (EQT) Q4 Earnings Miss Estimates, Revenues Beat
EQT Corporation (EQT - Free Report) reported fourth-quarter 2019 adjusted loss from continuing operations of 3 cents per share against the Zacks Consensus Estimate of earnings of 9 cents. In the year-ago comparable period, the company reported adjusted profit of 79 cents per share.
Total operating revenues declined to $1,011.5 million from $1,245.1 million in the prior-year quarter. However, the top line beat the Zacks Consensus Estimate of $962 million.
The lower-than-expected earnings were caused by a year-over-year decrease in natural gas equivalent production volumes and lower commodity price realizations, partially offset by decline in total operating expenses.
The company recently made a 15-year gathering agreement with Equitrans Midstream Corporation (ETRN - Free Report) , which pushed the minimum volume commitment level to 3 Bcf per day. The move is expected to boost EQT Corp’s profits by reducing per unit costs in the coming days.
EQT Corporation Price, Consensus and EPS Surprise
EQT Corporation price-consensus-eps-surprise-chart | EQT Corporation Quote
Proved Reserves
At the end of 2019, the company had proved developed reserves of 12.4 trillion cubic feet equivalent, 7.7% higher than the 2018 level. Of the total, 84.5% was located in the Marcellus region.
Operations:
Production Declines
Sales volume declined to 373.5 billion cubic feet equivalent (Bcfe) of natural gas from the year-ago figure of 393.9 Bcfe. Natural gas sales volume was 357.2 Bcf in the fourth quarter, down from 372.9 Bcf a year ago. Total liquids sales volume in the quarter was recorded at 2,720 thousand barrels (MBbls), lower than the year-ago period’s 3,504 MBbls.
Price Realization Decreases
Average realized price of natural gas equivalents was $2.54 per thousand cubic feet, down from $3.13 in the year-ago quarter. Natural gas price was recorded at $2.64 per Mcf, lower than the year-ago level of $3.86. Oil price was recorded at $36.76 per barrel, significantly down from $46.17 in the fourth-quarter 2018.
Expenses
Total selected operating expenses were $1.37 per unit in fourth-quarter 2019, down from $1.53 in the prior-year quarter.
Notably, processing expenses were 8 cents per thousand cubic feet equivalent (Mcfe) compared with 9 cents in the fourth quarter of 2018. However, gathering expenses rose to 57 cents per Mcfe from 54 cents in the year-ago period. Transmission costs increased to 52 cents per Mcfe from the year-ago level of 46 cents. Lease operating expenses were 6 cents in the quarter, up from 4 cents in the year-ago period.
Wells Drilled
The company spud 30 net wells in the fourth quarter. Of the total, 24 wells were drilled in the PA Marcellus, with the average lateral length being 12,750 feet, and six were drilled in the OH Utica, with the average lateral length being 11,540 feet.
Cash Flows
EQT Corp’s adjusted operating cash flow was $503 million in the quarter, down from $692.6 million a year ago. Free cash flow rose to $147.5 million from $134.2 million in fourth-quarter 2018.
Capex & Balance Sheet
Total capital expenditure amounted to $355.5 million in the fourth quarter, down from $558.4 million in the year-ago period.
As of Dec 31, 2019, the company had $4.6 million in cash and cash equivalents, and $5.3 billion of total debt.
Guidance
In first-quarter 2020, EQT Corp expects to drill net 18 wells in the PA Marcellus and one in OH Utica. It intends to run two-three top-hole rigs in 2020.
It is continuing an asset monetization plan to deleverage its portfolio, which will likely be executed by mid-2020.
The company anticipates total sales volume in the 360-370 Bcfe range for first-quarter 2020. For full-year, it expects total sales volume within 1,450-1,500 Bcfe, indicating a decline from the 2019 level of 1,507 Bcfe.
Total unit costs for 2020 are expected in the range of $1.38-$1.50 per Mcfe. The metric was recorded at $1.44 per Mcfe in 2019.
The company anticipates adjusted operating cash flow in the range of $1.50-$1.60 billion for 2020, suggesting fall from $1.83 billion in 2019. It expects capital expenditure in the band of $1.15-1.25 billion for the year, implying a decrease from $1.77 billion in 2019.
Zacks Rank & Stocks to Consider
EQT Corp currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the energy sector include Chevron Corporation (CVX - Free Report) and Hess Corporation (HES - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Chevron’s bottom line for 2020 is expected to rise 12.8% year over year.
Hess’ bottom line for 2020 is expected to rise 93.7% year over year.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>