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After EQT reported its October results, we updated our fair value and reset our long-term projections for production and debt levels. We added the merger with Range Resources and the power infrastructure business serving data centers to the growth drivers we track. We also introduced a variable for strategic production cuts, reflecting the company's new practice of pausing output when gas prices are low. Our model now accounts for a higher share count and a larger inventory of drilling locations following recent acquisitions.
UBS reaffirmed its buy rating on the gas producer this week. The firm set its target price at $75, which is about 34 percent higher than where the stock trades today. Other analysts have a more cautious average target of $67. This vote of confidence comes as the company works to integrate its recent merger and lower its transport costs. While the stock has not yet reached these levels, the call suggests that some analysts see significant room for the business to grow as it shifts from a simple driller to a more integrated energy company.
Source: UBS
EQT reported a strong quarter where it brought in more profit than expected while spending less to get it. The company spent $638 million on things like drilling and pipelines, which was 10 percent lower than its own forecast. This lower spending helped the company generate $283 million in free cash flow, which is the cash left over after paying for all operations and equipment.
These results show the company is becoming more efficient at a time when natural gas prices are often volatile. By keeping its operating costs at the low end of its goals, EQT is proving it can protect its profit margins even when the market is difficult. The stock rose about 2.5 percent following the report, as the company continues to focus on using its own pipeline network to keep costs down.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
The company will share its latest financial results today. Analysts expect earnings of about 37 cents per share on revenue of about 1.8 billion dollars. Beyond the numbers, the focus is on how well the company is managing its new pipeline network. This infrastructure is meant to protect profits by removing the fees EQT used to pay others to move its gas. We will also look for updates on the 250 million dollars in annual cost savings management promised after its recent merger.
EQT has reached a deal to buy Range Resources, a move that will combine two of the largest natural gas drillers in the Appalachian region. Under the agreement, Range shareholders will receive 0.987 shares of EQT for every share they own. Once the deal closes, EQT owners will hold about 73 percent of the combined company, while Range owners will hold the remaining 27 percent.
This deal follows EQT's strategy of getting bigger to lower its costs. By combining their operations in the same region, the companies can share equipment and pipelines more efficiently. As part of the agreement, EQT will add two members to its board, including Range's current CEO, Dennis L. Degner. The merger still needs approval from shareholders of both companies and government regulators.
Source: 8-K filing
Management has cleared its profit targets in seven of the last eight quarters. This consistent record shows they set conservative bars and have a tight grip on their production costs.
| Expectation | |
|---|---|
| EPS | $0.69 |
| Revenue | $2.05B |
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