EQT Corp. (EQT) Q2 Results - July 24

[dan_s]

Second Quarter 2024 and Recent Highlights:

Closed the acquisition of Equitrans Midstream Corporation (Equitrans) a full quarter ahead of plan, resulting in approximately $150 million of savings relative to initial expectations; accelerates synergy capture and the commencement of deleveraging plan < The acquisitions closed much sooner than I expected. This will have a positive impact my Q3 forecast.

Sales volume of 508 Bcfe, above the high-end of guidance driven by continued operational efficiency gains and strong well performance < Production exceeded my Q2 forecast of 480.2 Bcfe

Capital expenditures of $576 million, below the midpoint of guidance despite faster activity pace; recent developments show a step change improvement in completion efficiency with potential for structurally lower well costs

Total per unit operating costs of $1.40 per Mcfe, below the low-end of guidance driven by lower-than-expected LOE and SG&A expense

Higher-than-expected southeast gas prices via Mountain Valley Pipeline capacity drove second quarter differential towards the low-end of guidance

Total debt and net debt down from $5.8 billion and $5.7 billion at year-end 2023 to $5.0 billion and $4.9 billion, respectively, at quarter-end

Retired approximately $600 million of 2025 senior notes with proceeds from partial non-operated asset monetization; marketing remaining 60% interest in northeast Pennsylvania non-operated assets

Increased revolving credit facility lender commitments from $2.5 billion to $3.5 billion

Converted non-binding Heads of Agreement with Glenfarne Energy Transition's Texas LNG to binding Liquefaction Tolling Services Agreement for 2 million tonnes per annum of liquefaction tolling capacity

Released 2023 ESG report highlighting successful achievement of GHG emission intensity and methane emission intensity targets one year ahead of schedule; on track to achieve net zero by 2025

President and CEO Toby Z. Rice stated, "This week marked a significant milestone in the history of our company as we closed the acquisition of Equitrans, transforming EQT into America's only large-scale, vertically integrated natural gas business. This combination creates a truly differentiated business model among the energy investment landscape, as EQT is now at the low end of the North American natural gas cost curve. We believe our sustainable cost structure advantage, combined with our scale, peer leading inventory depth, low emissions profile and world class operating team offers the best risk-adjusted exposure to natural gas prices of any publicly investable asset in the world."

Rice continued, "We also experienced yet another quarter of operational outperformance as our teams continue to find novel ways to drive incremental efficiency gains. Recent enhancements we've made to supply chain logistics have driven materially faster completion times on our latest wells, which are outpacing our 2023 average completion speed by more than 35%. We see the potential for these gains to drive structurally lower well costs and future maintenance capital requirements."

Lower than expected realized natural gas prices caused EQT's net income and operating cash flow to come in below my forecast. There was a lot of noise impacting Q2 results.