EQT Corp (EQT) Price Target - Oct 27
Posted: Thu Oct 27, 2022 10:17 am
Truist Financial's price target is $73.
Neal Dingmann's Notes:
EQT reported a 3Q22 EBITDAX miss but FCF beat as lower than expected spending and
better than expected pricing outweighed less than expected gas production. 2022 production
guidance was notably lower due to third party impacts that will cause 4Q volumes to
decline. However, capex guidance was also marginally lowered on continued, slightly muted
activity. We expect a large portion of tomorrow’s call will center around the recent Tug Hill
(Private) acquisition, with questions on the order of development activity (legacy vs new),
potential efficiencies, and any impact the deal may have on the ability to lock in future LNG
agreements. With our estimate of >$1b of FCF per quarter in FY23, we forecast EQT quickly
dropping leverage, and likely continuing to pursue accretive acquisitions.
Operational/Financial Updates
• EQT bought back $150mm of incremental shares since the last update, reducing shares
outstanding by ~3.6mm
• The company reduced its net debt by $0.3b q/q
• In conjunction with the Tug Hill acquisition, the company layered on a significant amount
of puts
Guidance Updates
• FY22 production guidance was lowered by 2% to low end of the prior guide with estimates
not easily comparable due to the timing of the closing of the recent acquisition, as
guidance does not include volumes from the acquisition
• FY22 capex guidance was decreased by ~1% to a new midpoint of $1,438mm vs the
prior $1,450mm, with estimates not easily comparable due to the timing of the closing of
the recent acquisition, as guidance does not include capital from the acquisition
• EQT is guiding to a $0.05/mcf increase in the company’s differential in 4Q vs 3Q; all other
cost guidance items were unchanged
-----------------------
I still need to spend more time on EQT, but this company is going to report a SIGNIFICANT INCREASE in FCF next year as most of their "Bad Hedges" expire at year-end. My valuation will be around $70 just because I am dropping 2021 CFPS from all of my valuations.
Neal Dingmann's Notes:
EQT reported a 3Q22 EBITDAX miss but FCF beat as lower than expected spending and
better than expected pricing outweighed less than expected gas production. 2022 production
guidance was notably lower due to third party impacts that will cause 4Q volumes to
decline. However, capex guidance was also marginally lowered on continued, slightly muted
activity. We expect a large portion of tomorrow’s call will center around the recent Tug Hill
(Private) acquisition, with questions on the order of development activity (legacy vs new),
potential efficiencies, and any impact the deal may have on the ability to lock in future LNG
agreements. With our estimate of >$1b of FCF per quarter in FY23, we forecast EQT quickly
dropping leverage, and likely continuing to pursue accretive acquisitions.
Operational/Financial Updates
• EQT bought back $150mm of incremental shares since the last update, reducing shares
outstanding by ~3.6mm
• The company reduced its net debt by $0.3b q/q
• In conjunction with the Tug Hill acquisition, the company layered on a significant amount
of puts
Guidance Updates
• FY22 production guidance was lowered by 2% to low end of the prior guide with estimates
not easily comparable due to the timing of the closing of the recent acquisition, as
guidance does not include volumes from the acquisition
• FY22 capex guidance was decreased by ~1% to a new midpoint of $1,438mm vs the
prior $1,450mm, with estimates not easily comparable due to the timing of the closing of
the recent acquisition, as guidance does not include capital from the acquisition
• EQT is guiding to a $0.05/mcf increase in the company’s differential in 4Q vs 3Q; all other
cost guidance items were unchanged
-----------------------
I still need to spend more time on EQT, but this company is going to report a SIGNIFICANT INCREASE in FCF next year as most of their "Bad Hedges" expire at year-end. My valuation will be around $70 just because I am dropping 2021 CFPS from all of my valuations.