EQT Corp. (EQT)

[dan_s]

There is a 99% chance that EQT Corp. will be added to the Sweet 16 after I have a chance to see their 2nd quarter results.

EQT is merging with Rice Energy (RICE) to form a "Power House" natural gas and NGL company. Immediately after the merger (expected to close in October or November) the combined company will be producing over 3.6 Bcfepd (~88% natural gas and ~10% NGLs).

I spent the morning updating my forecast model for EQT, assuming the merger closes mid-Q4. The forecast spreadsheet has been posted to the EPG website. You can view it there and download it to Excel, so you can play with the forecast periods. Note the RED BOX on the forecast is First Call's Operating Cash Flow per share as of 6/27/2017.

My initial valuation of EQT is $81.00/share, which compares to First Call's current price target of $76.37/share. Keep in mind that only a few Wall Street firms have updated their forecast/valuation models for EQT to include the merger, so First Call numbers will be changing.

There is a lot of "WAG" (wild ass guessing) in my forecast, but I've made an effort to err on the conservative side for production volumes and commodity prices.

When EQT and RICE release Q2 results, I will have some fresh numbers to work with.

I am extremely bullish on where natural gas and NGL prices are heading in just a few months. The natural gas market is going to be MUCH TIGHTER heading into the winter heating season than it was last year. Now is a good time to add more exposure to natural gas. Post-merger, EQT will be the largest natural gas producer in the U.S.