I am considering EQT Corp. (EQT) for inclusion in our Sweet 16 because I want to add more exposure to natural gas and NGLs. EQT is merging with Rice Energy to become the #1 producer of natural gas in the U.S. Below are comments from a new Wells Fargo research report on the company. Wells Fargo rates EQT "Market Preform" with a valuation of $62. - Dan
Following the EQT-RICE acquisition announcement, EQT
management hosted a conference call with key highlights below. We
view the transaction positively given significant overlap of high
quality core acreage that should drive what EQT management
estimates to be $2.5 billion in development and economic synergies
(longer laterals, leaner operating costs, lower cost of capital) as a
combined entity, while also providing additional growth potential for
midstream entities EQM/EQGP. With the business model shifting
from outspending for high growth to more moderate growth with
free cash, this has bullish implications for the commodity and we
believe investors stand to benefit as shale enters a more mature
phase. EQT is better positioned post this transaction in our view.