EQT Corp (EQT) Updated Valuation - Jan 6

[dan_s]

I have updated my forecast/valuation model for EQT and I am holding my valuation at $25. I just added the increase production being acquired from Chevron (~450 Bcfe per day with 75% being dry gas) and minimal organic production growth from in 2021 and 2022. The upside here is that with EQT's updated guidance for 2021 that increase confidence in my forecast model, I will raise the multiple of operating cash flow being used to value it. As of today, my valuation is just 3.5 X annualized operating cash flow per share for 2020 to 2022. IMO opinion a large-cap that is generating solid free cash flow and has this much low-risk high-quality development drilling inventory should be trading for around 6X operating cash flow per share.

EQT is trading at $14.69 at the time of this post, which is less than 50% of its book-value per share.
Per TipRanks: During December, six energy sector analysts updated their models to include the impact of the Chevron Acquisition. Their valuations range from $16 to $25.

My updated forecast/valuation model will be posted to the EPG website later today.

More than 98% of EQT's production is natural gas and NGLs, so it is about as close to a pure "gasser" as you can get. Today it is the largest natural gas producer in the U.S.

Note that EQT now has ~80% of their 2021 production hedged, so it has minimal commodity price risk, but IMO it has hedged away a lot of potential upside if ngas prices do increase to $3.00.