EQT Corp. (EQT) Q4 Results - Feb 18

[dan_s]

EQT Corporation (NYSE: EQT) today announced financial and operational results for the fourth quarter and full year 2024 as well as financial and operational guidance for 2025.

Fourth Quarter and Recent Highlights:

Sales volume of 605 Bcfe, at the high-end of guidance driven by continued operational efficiency gains and strong well performance, despite 27 Bcfe of total net curtailments < 6,576,000 Bcfe per day beat my forecast of 6,305,000 Bcfepd.

Capital expenditures of $583 million, 7% below the low-end of guidance, benefiting from efficiency gains and lower-than-expected midstream spending

Differential $0.13 per Mcf tighter than mid-point of guidance as tactical curtailments maximize value without sacrificing operational efficiencies

Total per unit operating costs of $1.07 per Mcfe; at the low-end of guidance driven by production outperformance and lower-than expected LOE and SG&A expense

Net cash provided by operating activities of $756 million; generated $588 million of free cash flow < Very Good.

Closed on non-operated asset sale and midstream joint venture transaction, receiving proceeds of ~$4.7 billion, net of certain transaction fees and expenses

Exited the quarter with $9.3 billion total debt and $9.1 billion of net debt, inclusive of ~$475 million of working capital usage, which is expected to reverse as pricing stabilizes in 2025

Equitrans integration 90% complete; actions to date have de-risked ~85% of base synergies, while ~35% of upside synergies have been de-risked given faster-than-expected benefits from compression investments

Year-end 2024 proved reserves totaled 26.3 Tcfe, flat year-over-year when normalizing for the impact of non-operated asset sales despite SEC price deck dropping toward $2 per MMBtu, underscoring economic resiliency of world-class, low-cost Appalachian reserve base

2025 Outlook Highlights:

Initiated 2025 production guidance of 2,175 – 2,275 Bcfe, 125 Bcfe above prior expectations due to strong well performance and benefits from compression investments

Initiated 2025 maintenance capital guidance of $1,950 – $2,120 million and growth capital of $350 – $380 million; reserve development capital guidance ~$200 million lower year-over-year reflecting continued efficiency gains and benefits from compression investments

Planning to drop from 3 to 2 frac crews at the end of first quarter 2025, several months ahead of prior plan due to further completion efficiency gains

Projecting ~$2.6 billion and ~$3.3 billion of free cash flow attributable to EQT in 2025 and 2026, respectively, at recent strip pricing

Expect to exit 2025 with ~$7 billion of net debt at recent strip pricing, well ahead of $7.5 billion debt target

President and CEO Toby Z. Rice stated, "EQT's operations are firing on all cylinders, with material efficiency gains, robust well performance and Equitrans integration momentum driving outperformance across the board. This was on clear display in the fourth quarter, as higher-than-expected production and capital spending well below the low end of guidance resulted in nearly $600 million of free cash flow despite Henry Hub averaging just $2.81 per MMBtu during the quarter."

Rice continued, "This momentum is carrying forward into 2025, with continued efficiency gains and quicker-than-expected benefits from midstream compression investments driving production upside relative to our original outlook, while reserve development capital spending is expected to decline by approximately $200 million year-over-year. Our fourth quarter results and 2025 outlook showcase the power of the integrated, low-cost platform that we have strategically sculpted over the past several years."

[dan_s]

I have updated my valuation of EQT to reflect $59/share. It should get several upgrades tomorrow after their conference call.

2025 production was less than I expected, but EQT likes to "under-promise and over-deliver". Plus, rising natural gas prices will give them a nice revenue boost.