EQT Corp (EQT) Price Target - Sept 7

EQT Corp (EQT) Price Target - Sept 7

Postby dan_s » Wed Sep 07, 2022 2:51 pm

At the time of this post EQT was trading at $45.47.
I have updated my forecast/valuation model for EQT and my valuation adjusts to $63.00 per share, but when my model rolls forward at year (and if the Henry Hub ngas price stays over $5.00) my valuation will go over $75.00. Why? >>> EQT should get a BIG increase in their realized ngas price in Q1 2023 since a lot of Bad Hedges expire at year-end 2022.

TipRanks: Since the announcement below, 4 analysts rate EQT a BUY and they have updated their price target for EQT to the following:
> $54.00 > Credit Suisse
> $102.00 > Siebert Williams Shank < This is just 5.8 X my operating cash flow per share forecast for 2023 based on a realized ngas price of $4.50.
> $55.00 > Scotiabank
> $63.00 > Truist Financial < If you would like to real Neal Dingmann's full report, send me an email: dmsteffens@comcast.net
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EQT Corporation (NYSE: EQT) announced yesterday that it has entered into a purchase agreement with THQ Appalachia I, LLC ("Tug Hill") and THQ-XcL Holdings I, LLC ("XcL Midstream") whereby to which EQT has agreed to acquire Tug Hill's upstream assets and XcL Midstream's gathering and processing assets, for total consideration of $5.2 billion. Tug Hill and XcL Midstream are backed by equity commitments from funds managed by Quantum Energy Partners. The transaction is expected to close in the fourth quarter of 2022, with an effective date of July 1, 2022. Subject to the transaction close and EQT's regular board approval process, Wil VanLoh, Founder and CEO of Quantum Energy Partners, will join EQT's board of directors.

Transaction Highlights:
> Strategic bolt-on adds ~800 MMcfe/d in the core of southwest Appalachia
> Integrated midstream facilities provide superior economics and margin capture
> Assets acquired at attractive valuation with immediate accretion
> Leverage-neutral transaction, maintains Investment Grade balance sheet metrics
> Transaction further improves the durability of EQT's free cash flow generation

President and CEO Toby Z. Rice stated, "The acquisition of Tug Hill and XcL Midstream checks all the boxes of our guiding principles around M&A, including accretion on free cash flow per share, NAV per share, lowering our cost structure and reducing business risk, while maintaining an investment grade balance sheet. The valuation metrics are compelling and accretion from the deal should lower our NYMEX free cash flow breakeven price by approximately $0.15 per MMBtu, which gives us greater free cash flow durability through the cycle. As a result of even more confidence in the sustainability of our business, we are enhancing our shareholder returns framework by doubling our share repurchase authorization to $2.0 billion and increasing our year-end 2023 debt reduction goal from $2.5 billion to $4.0 billion."

Wil VanLoh, Founder and CEO of Quantum Energy Partners, said, "We are extremely pleased to have entered into this transaction and, in doing so, look forward to becoming a core shareholder in EQT and working closely with the EQT management team and board to enhance the long-term value of the company. We believe the company is in a uniquely strong position as the largest producer of natural gas in the country, with a differentiated track record of operational excellence, a deep core inventory base and a peer-leading commitment to ESG. The Tug Hill and XcL Midstream assets are complementary to EQT's existing footprint, and we believe the company is now positioned to create even more value for its shareholders through this highly strategic combination. I've admired Toby's leadership and vision since assuming the role of CEO and I'm excited about the opportunity to join EQT's board of directors upon transaction close. I am also incredibly thankful to have had the opportunity to partner with the Tug Hill and XcL teams over the past 8 years. They are a values-driven, creative and entrepreneurial group of professionals that have been great partners and close friends."

Michael Radler, CEO of Tug Hill and XcL Midstream said, "I am very proud of the Tug Hill and XcL Midstream teams and the amazing job they have done in building premier upstream and midstream companies in the heart of southwest Appalachia. Quantum has been a great partner and stood beside us as we built these companies over the last decade. People are what make companies great, and EQT, Tug Hill, XcL Midstream and Quantum have great people with shared values. We have long admired EQT and believe they are our natural acquiror given the synergies between the businesses. Since stepping into the CEO role, Toby has systematically changed EQT, internally and externally, into a world class natural gas producer that is focused on great culture, sound economic decision making and maximizing shareholder value. I admire his ability to execute on the plan he has outlined, and I believe in his future goals. EQT is the face of the new energy paradigm. His vision around U.S. LNG is something we believe in and because of our significant ownership position, are excited to be a part of that vision."
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Bottomline: If you believe there has been a "Structural Change" in the U.S. natural gas market (as I do), then EQT should be one of the Core Holdings in your portfolio. Near-term: EQT's financial results are going to be STUNNING over the next three quarters.

My updated forecast/valuation model for EQT will be posted to the EPG website later this afternoon.
Dan Steffens
Energy Prospectus Group
dan_s
 
Posts: 30137
Joined: Fri Apr 23, 2010 8:22 am

Re: EQT Corp (EQT) Price Target - Sept 7

Postby dan_s » Fri Sep 09, 2022 11:54 am

RBC Capital has raised their price target by $2 to $57.

Note received this morning.
Our view: The Tug Hill acquisition is 10-15% accretive to our EPS/CFPS estimates
and enhances FCF generation that amounts to a total of $6 billion (2023) at strip
commodity prices. Management's recent comments during its 2Q22 conference
call highlighted that acquisitions need to be more compelling than buying its own
stock back and also additive to asset quality, including reducing the corporate
break-even point and we believe this deal checks those boxes. Importantly, the
transaction should be leverage neutral by YE23. The higher FCF output provided a
catalyst to increase the buyback authorization, but debt reduction is likely priority
#1.
Dan Steffens
Energy Prospectus Group
dan_s
 
Posts: 30137
Joined: Fri Apr 23, 2010 8:22 am


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