EQT Corp. (EQT) Valuation Update - Nov 23

[dan_s]

EQT closed at $45.92 on November 22, which is above my current valuation of $43.00.

You each need to decide how bullish you are on U.S. natural gas prices.

EQT is almost a pure "Gasser" with a production mix of 94.2% natural gas, 5.4% NGLs and only 0.4% condensate that sells at a $14/bbl discount to WTI.

TipRanks' consensus price target is $42.79, which is the average price target of the 17 energy sector analysts that cover EQT. The most recent price target update is from J.P. Morgan analyst Arun Jayaram who rates EQT a BUY with a price target of $44.00.

This morning, I reviewed my forecast model for EQT and I don't see anything that needs to be changed. For 2025 I am using a HH NGas price of $3.50.

Obviously, if U.S. natural gas prices do move over $3.50, my valuation of EQT will go higher. If you'd like to read HFI Research's detailed (and very bullish) natural gas price forecast, send me an email: dmsteffens@comcast.net

EQT is a VERY LARGE upstream company that is the 2nd largest natural gas producer in the U.S. It will exit 2025 producing close to 6 Bcfpd of dry gas and 57,000 bpd of NGLs.

Today, I rate EQT a HOLD for those of you bullish on natural gas. Today, in our Sweet 16 Growth Portfolio I think Coterra (CTRA) and Ovintiv (OVV) have more upside.

Outside of the Sweet 16, because of their production mix, I like:
> Spartan Delta (SDE.TO): ~92% of current production is natural gas & NGLs
From our High Yield Income Portfolio
> Black Rock Minerals (BSM): 74.5% NGas and NGLs
> Kimbell Royalty Partners (KRP): 69.0%
> Civitas Resources (CIVI): 53.9%
> InPlay Oil (IPOOF): 58.6% < Doug Bartole, InPlay's CEO will be joining me on our next webinar on Tuesday, November 26.

[dan_s]

Bank of America's Top Picks for U.S. natural gas:
https://finance.yahoo.com/news/bank-america-pounds-table-2-105236470.html

[Petroleum economist]

In addition to Dan above:

My two favorite gas producers are Canadian: Peyto Exploration and NuVista Energy.
Both are pure gas/NGL producers (no oil) with ample reserves and high annual reserves bookings.
Their production growth is limited by the gas market.

NuVista has a stronger balance sheet than Peyto, but Peyto has a lower PE and returns more funds to shareholders.
Therefore, I have a slight reference for Peyto Exploration.

Spartan Delta is similar but a lot smaller.

[dan_s]

Watch Joe's "Saturday Summary" here: https://www.weatherbell.com/premium/

The weather forecast for December (at least the first half) shows colder than normal temperatures for the Northeast. If so, gas in storage should be very close to the 5-year average by Christmas. Much higher LNG exports are expected in Q1 2025.