EQT Corp (EQT) Valuation Update - Apr 28

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dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

EQT Corp (EQT) Valuation Update - Apr 28

Post by dan_s »

I have updated my forecast/valuation model for EQT and I have increased my current valuation by $2.50 to $47.50. Q1 results beat my forecast.

At the time of this post EQT was trading near $34/share.

EQT is the largest natural gas producer in the U.S. Production of 5.1 Bcfpd in Q1 should increase to over 6.1 Bcfpd in Q3, assuming they close the Tug Hill & XcL Acquisitions this quarter.

My forecast model has been posted to the EPG website.

TipRanks: "In the last 3 months, 13 ranked analysts set 12-month price targets for EQT. The average price target among the analysts is $43.31. The 13 price targets range from $28 to $67. This morning, Piper Sandler increased their price target by $3 to $53."
Dan Steffens
Energy Prospectus Group
Fraser921
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Joined: Mon Mar 22, 2021 11:48 am

Re: EQT Corp (EQT) Valuation Update - Apr 28

Post by Fraser921 »

Interesting comment on hedges and their view on NG prices and inventory levels

Well, when we hedge and we use collars, okay, we like to see SKU in the -- when we do that. And so the best times to add collars is when you have an upper movement in gas. If we wanted to do swaps, which we could do and lock in some of this and protect some of the 2024 picture.

But what we're also seeing is we're seeing activity slowing on the gas side. We're seeing activity starting to slow on the coal side, and we're heading into the summer months here, which is a catalyst. And we're also seeing some incremental LNG come on in the first quarter of next year with Golden Pass. So I think the worries about storage levels getting to 4 Tcf or 4.1 TCF. One, we don't think it's going to get there. I think you're going to see it come in short of that. And then the second is, if you think about storage, even at 4 Tcf, that's basically 30 days of cover which if you understand the commodity business, I know you do, you really need 60 days to really provide any buffer in a peak demand period. So we see if you get normal winter, you could see spike in gas and you really need about 400 Bcf of incremental storage in 2024 to be able to support that incremental LNG that's coming online in '24. So I think we're seeing a very positive setup here.

The big negative could be if summer doesn't show up and we do on show up. And that's why we like to hedge is to manage those risks. So we're going to try to figure out the right time to jump in and add those hedges and try to derisk it. But we see a lot of moving parts, both positive and negative and trying to make sure that we get from a timing perspective and how we hedge right.
dan_s
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Joined: Fri Apr 23, 2010 8:22 am

Re: EQT Corp (EQT) Valuation Update - Apr 28

Post by dan_s »

It is a good point that comparing today's ngas storage report to the 5-year average does not take into account how much larger the demand for U.S. ngas is compared to 5 years ago.
Dan Steffens
Energy Prospectus Group
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