EQT Corp. (EQT) Q1 Results - April 23

[dan_s]

Key stat: EQT's Q1 production of 6,341,644 mcfepd beat my forecast of 6,150,000 mcfepd AND (like RRC) their realized natural gas prices, net of differential and cash settlement on their hedges was $3.65/mcf, which was $0.35/mcf higher than my forecast.

Press Release:
First Quarter 2025 and Recent Highlights:
> Production: Sales volume of 571 Bcfe, at the high-end of guidance driven by strong well performance and minimal winter weather
impact from integrated midstream coordination
> Capital Expenditures: $497 million, 19% below the mid-point of guidance due to lower-than-expected completions, land and
midstream spending
> Realized Pricing: Differential $0.16 per Mcf tighter than mid-point of guidance due to tactical production response from opening
chokes into strong winter pricing < EQT's base gas price was $3.65/mcf before differentials, Btu uplift and cash settlements on their hedges, which compares to the $3.50/mcf that I was using in my forecast model. This is also good news for AR and CTRA, which will report Q1 results on April 30 and May 5.
> Operating Expenses: Total per unit operating costs of $1.05 per Mcfe, 8% below the mid-point of guidance driven by lower-than
expected LOE and gathering expense < Slightly below my forecast.
> Cash Flow: Net cash provided by operating activities of $1,741 million; generated $1,036 million of free cash flow attributable to
EQT < Beat my forecast.

> Balance Sheet: Exited the quarter with $8.4 billion total debt and $8.1 billion of net debt, down approximately $1 billion from
year-end 2024 < EQT still has some work to do on the balance sheet, but the debt they took on for last years "Transformation Transactions" was well spent and will get paid down quickly if U.S. natural gas prices firm up over $4.00/MMBtu, which I expect to happen by Q4 2025.

Increasing Annual Guidance: Raising 2025 production guidance by 25 Bcfe and lowering the mid-point of 2025 capital spending by
$25 million due to continued efficiency gains, strong well performance and additional synergy capture from the Company's
ownership of the gathering, transmission and storage assets acquired from Equitrans Midstream Corporation (Equitrans Midstream)

Accretive Bolt-On Acquisition: Announcing agreement to acquire upstream and midstream assets of Olympus Energy for $1.8
billion ; purchase price equates to ~3.4x adjusted EBITDA multiple and ~15% unlevered free cash flow yield ; pro-forma year
end 2025 net debt forecasted to be ~$7 billion at recent strip, comfortably below $7.5 billion target. < EQT is an AGGRESSIVE GROWTH COMPANY, so investors are in for quite a ride if all of their deals work out.

President and CEO Toby Z. Rice stated, "EQT is off to an exceptional start in 2025, with the first quarter generating the strongest financial
results in recent company history. Seamless coordination across our integrated midstream and upstream assets resulted in volumes at the
high end of guidance, and our tactical production response opening chokes into peak winter prices drove higher realizations. Along with
lower-than-expected capital spending, EQT generated more than $1 billion of free cash flow in the first quarter alone."

Rice continued, "We are raising 2025 production guidance by 25 Bcfe while reducing the mid-point of 2025 capital spending by $25 million
due to strong well performance, ongoing efficiency gains and additional Equitrans Midstream synergy capture. This underscores the
tremendous momentum we're experiencing at EQT and we see no signs of slowing down as we look ahead."

Rice added, "We are also announcing that we have entered into an agreement for the accretive bolt-on acquisition of the upstream and
midstream assets of Olympus Energy, which has a vertically integrated asset base and an unlevered free cash flow breakeven price
comparable to EQT's peer leading position at the low end of the cost curve. The purchase price equates to an approximately 15% unlevered
free cash flow yield , highlighting attractive value for EQT shareholders. Additionally, the assets are positioned adjacent to several
proposed power generation projects, providing potential strategic value upside."

Bottomline: Toby Rice is a "Driver"

[dan_s]

My valuation of EQT will be going up, but I need to spend some time with their 10Q filing with the SEC before I can finish updating the forecast/valuation model.

[ChuckGeb]

I am perplexed as your reasoning of updating forecasts and valuations right before earnings release and then again right after the release. What is your point?