Energy Prospectus

Q3 net income plunged to $81.2M, or $0.20/share, from $683.6M, or $1.69/share, in the year-earlier quarter, but adjusted earnings of $125.7M, or $0.30/share, far exceeded expectations for a ~$0.10 loss.

Q3 revenues tumbled 42.5% to $1.18B from $2.07B a year ago, as total sales volumes increased 7% to 523B cfe from 488B cfe in the same quarter last year.

EQT (EQT) said its average realized price fell to $2.28/Mcfe in the quarter from $3.41/Mcfe a year ago.

For Q4, the company guided for total sales volume of 525B-575B cfe and liquid sales volume of 5.35M-5.75M bbl.

On its acquisition of Tug Hill and Xcl Midstream during the quarter, EQT (EQT) President and CEO Toby Rice said integration of the assets is occurring at a "record pace."

"We've unleashed this best-in-class execution on the Tug Hill assets, with our teams improving drilling and completion efficiency by roughly 40% in just 60 days of operating the assets," Rice said.

Adjusted net income and Adjusted operating cash flow beat my forecast.
Production for the quarter just a tiny bit lower than my forecast.
I will update my forecast for EQT today.

This caught my eye: "Tactically added hedges in 2024, bringing total floor coverage to >40% at an average price of $3.59 per MMBtu in the Q1 – Q3 2024 period, while remaining unhedged in 2025." < Since they have locked in a price over what I've used in my 2024 forecasts ($3.25 per MMBtu for 2024) this will improve my outlook for EQT. Obviously, they believe ngas prices will be much higher a year from now.

EV = 23.3 billion

FCF = -2 m

If you want to make 10 % on your investment , they need another 2.33 b of FCF

Production 523 b is roughly 2,000 b / yr, prices 1 buck higher would go a long way to close the gap. They need 3.50 per mcf

Uncertain winter keeps me on sidelines with the gassers

All these companies are trying to maintain production. Can you imagine what would happen if they cut production by 2 %- 5 %?

To value the gassers, especially EQT, you need to look beyond 2023.
> Take a hard look at slide 10 of today's presentation.
> Also, note on slide 9 that EQT will be able to tap into the higher priced international gas market.

Q4 will include a full quarter of the increased volumes from the Tug Hill & XcL Acquisitions that closed Aug 22, 2023. Q4 production should be close to 6 Bcfe per day, up from 5,681,543 mcfe per day in Q3. Free cash flow in Q4 should be ~$200 million.

Once the Mountain Valley Pipeline is completed (s/b in Q1 2024), EQT should be able to ramp up production. What I am using for 2024 is the high end of their production forecast for Q4 2023 of 575 Bcfe (6,250,000 mcfepd).