Energy Prospectus

PR Newswire
EQT REPORTS FOURTH QUARTER AND FULL YEAR 2021 RESULTS AND PROVIDES 2022 GUIDANCE
Wed, February 9, 2022, 3:30 PM

PITTSBURGH, Feb. 9, 2022 /PRNewswire/ -- EQT Corporation (NYSE: EQT) today announced financial and operational performance results for the fourth quarter and full year 2021 as well as financial and operational guidance for 2022.

This why EQT will stay in the Sweet 16:
"The Company reported 2021 total proved reserves of 25.0 Tcfe, an increase of 5.2 Tcfe or 26% compared to 2020 due primarily to the Alta Acquisition and extensions, discoveries and other additions, partly offset by production. Proved developed producing reserves increased 3.6 Tcfe, or 28%, compared to 2020. Proved undeveloped reserves increased by 1.6 Tcfe, or 26%, compared to 2020."
Netherland Sewell and Associates, Inc. an independent consulting firm hired by management, reviewed 100% of the total net natural gas, NGLs and oil proved reserves attributable to EQT's interests as of December 31, 2021.
From 12-31-2020 to 12-31-2021 the PV10 value of EQT's proved reserves increased from $3,967 million to $21,496 million (based on NYMEX Strip prices for 2022 as of 12-31-2021) . < This compares to EQT's market-cap of $8,273 million.

Fourth Quarter Highlights:

> Sales volume of 527 Bcfe, 5,728,261 mcfepd < Compares to my forecast of 5,670,000 mcfepd for Q4.
> Total per unit operating costs of $1.26/Mcfe, $0.04/Mcfe below Q4 2020
> Net cash provided by operating activities of $1,171 MM; free cash flow of $422 MM < Compares to my operating cash flow forecast for Q4 of $726.5 million.
> Capital expenditures of $323 MM or $0.61/Mcfe
> Announced reinstatement of annual cash dividend of $0.50 per share of EQT common stock
> Announced $1 billion share repurchase program

Full Year 2021 Highlights:

> Sales volume of 1,858 Bcfe
> Total per unit operating costs of $1.28/Mcfe, $0.08/Mcfe below 2020
> Net cash provided by operating activities of $1,662 MM; free cash flow of $935 MM
> Capital expenditures of $1,104 MM or $0.59/Mcfe < Below EQT's guidance of $1,107.5 MM for 2021.
> Total proved reserves of 25 Tcfe and total discounted future net cash flows of $17.3 Billion < based on SEC conservative commodity pricing guidlines
> Completed the acquisition and full integration of Alta Resources
> Received credit rating upgrades from Moody's, S&P and Fitch
> Announced targets to achieve net zero Scope 1 & Scope 2 GHG emissions by or before 2025

2022 Plan Highlights:

> Sales volume of 1,950 - 2,050 Bcfe expected under a maintenance production program
> Capital expenditures of $1.300 - $1.450 B or $0.65 - $0.75/Mcfe
> Free cash flow of $1.400 - $1.750 B; free cash flow yield of 18%-22%

President and CEO Toby Rice stated, "In 2021, we further improved our balance sheet, successfully completed the acquisition and integration of Alta Resources, announced ambitious net zero targets and rewarded shareholders by implementing a comprehensive shareholder return program, consisting of a quarterly cash dividend and authorization to repurchase $1 billion of our common stock."

Rice continued, "We enter 2022 excited about the trajectory of our Company and our role in addressing climate change and supporting global energy equality. Through continued execution of our modern operating model, our Company expects to generate tremendous free cash flow from our deep inventory of core long-lateral inventory, contractually-declining gathering rates and improved capital efficiency. Our share repurchase authorization gives us the opportunity to allocate capital toward an attractive investment opportunity – our own stock. We look forward to advancing our ESG strategy by decreasing our emissions intensity through pneumatic valve replacement and other carbon-negative projects in pursuit of net zero by or before 2025. Lastly, as the benefits of natural gas are recognized both domestically and internationally, we look forward to continuing to demonstrate stewardship and delivering a sustainable energy source that meets the world's growing energy demands with affordable, reliable and clean natural gas."

I will be updating my forecast/valuation model for EQT after I have time to review the 10-K on Saturday.

Gerson Freitas Jr.
Thu, February 10, 2022, 11:46 AM

(Bloomberg) -- America’s largest shale-gas driller is updating its hedging strategy to profit from the next price rally of the heating and power-generation fuel, after missing out on the latest one.

EQT Corp.’s reduced debt burden is allowing the Pittsburgh-based producer to gradually shift from a defensive hedging strategy to one that will give it “large upside exposure” to higher prices and booming cash flows over the next few years, Chief Executive Officer Toby Rice said on a conference call with analysts.

Gas futures in New York jumped almost 50% last year after shale drillers slowed down production growth, while winter supply shortages crippled economies from Europe to Asia, boosting demand for U.S. exports.

EQT was slammed by investors after locking in prices for most of its gas supplies just before the rally that sent prices to seven-year highs. The move cost EQT $billions in financial losses, capped cash flows and forced the company to unwind some of its wrong-way price bets.

The company has hedges in place for about 65% of its planned 2022 output, according to an earnings presentation. For next year, it already has 42%, Chief Financial Officer David Khani said on the call.

“For 2023, we’ve layered on an overall floor of approximately $3 and a ceiling of approximately $5,” Khani said, referring to gas prices. The hedges “locked in free cash flow to execute on our shareholder return program.”

Current levels mean that every 10 cent increase in “unhedged realized prices” will provide EQT with an extra $200 million in free cash flows or 50 cents per share, Rice said.

BoA Equity Research 2-11-2022 Price Target is now $32/share.

As might be suspected, miss is on gas realizations
Adj. EPS of $0.41 missed consensus and BofA estimates of $0.55 and $0.63, mainly on
gas realizations as the gas differential of ($0.96) came in wider than guidance of
($0.80)-($0.70) due to an ~$1 difference in NYMEX settlement versus daily pricing
during the quarter. At this point, we suspect that the market may not be surprised as
other companies have reported similar realization weakness so far in 4Q21. Production
for the quarter came in at 527 Bcfe above mid-guidance (510-540 Bcfe)
Capex trending higher due, in part, to inflation.

In our view, the majority of attention will focus on EQT’s 2022 budget of $1.3-$1.45bn
with sales volumes of 1,950-2,250 Bcfe. Capex is higher than its initial guide of ~$1.3bn
at 2Q21 results due, in part,to inflation, with EQT guiding to a ~10% increase in SW PA
Marcellus well costs to ~$790 per lateral ft, as well as plans to spend ~$50mm on a new
frac design that it expects could improve productivity in 2023, albeit it has indicated
that it will likely not have a full answer on this until year end. Look for color on call.
Additionally, some unit costs appear to be trending slightly higher such as transmission
costs with management guiding to a range $0.29-$0.31 compared to 4Q21 results
$0.27. Differentials are also expected to widen due in part to the delay in the MVP
coming online after recent rulings by the 4th Circuit Court of Appeals with EQT now
assuming the pipe in service date by mid-2023. With the delay, the expected timing of
$535mm in gathering fee relief has shifted to the right. As a reminder, EQT, is expected
to receive this over three years ($270mm, $230mm and $35mm) once the pipe starts up
although it does have the option this year of having ETRN pay it $196mm for $235mm
of the relief as MVP is still not online as it exchanged half of its interest in ETRN for
additional fee relief back in early 2020. The other $300mm would still be subject to MVP
coming online. With these updates and a lower 2022 natural gas price (01/31/22 strip),
EQT is now guiding to 2022 free CF of $1.45-$1.75bn vs. $1.9bn prior (10/15/21 strip)

Reiterate Buy on Free CF Outlook with PO lowered to $32
With that said, EQT retains an impressive future free CF trajectory where it estimates
that it can generate cumulative free CF of > $10bn from 2021-2026 (Jan 31st strip).
Given this outlook, we reiterate our Buy rating. However, we lower our PO to $32 from
$35 due to rising costs, the reduction in value of EQT’s ~22mm shares in ETRN due to
the delay in MVP as well as the timing of $535mm in gathering fee relief.

>NYMEX settlement versus daily pricing

If you think Q4 was bad, wait until Q1 as Feb 2022 was an utter disaster with hedges settled at $ 6.26

Risk management is a misnomer, It's should be called Gain avoidence management