EQT Corp (EQT) Q4 Earnings In Line With Estimates, Up Y/Y

EQT Corporation (NYSE:EQT) posted fourth-quarter 2018 adjusted earnings per share of 79 cents, which was in line with the Zacks Consensus Estimate. The figure increased 46.3% from 54 cents in the year-ago quarter. Higher production sales volume and increased realizations supported the company’s fourth-quarter 2018 results.

In 2018, the company reported adjusted earnings of $1.70 per share, which missed the Zacks Consensus Estimate of $2.62. Nevertheless, the figure increased from 54 cents a year ago.

Net operating revenues in the quarter totaled $1,245.1 million, which lagged the Zacks Consensus Estimate of $1,257 million. Also, the figure improved from $1,129 million in the year-ago quarter.

In 2018, net operating revenues surged 47.4% year over year to $4,557.9 million. However, the figure lagged the Zacks Consensus Estimate of $4,830.0 million. The divestitures of Permian Basin and Non-Core Huron assets affected the company’s revenues.

The company completed the separation of its midstream business, forming a leading pure play upstream company and a leading pure play midstream company — Equitrans Midstream Corporation (ETRN). Subsequent to the simplification of EQT Corp’s corporate structure, it continues to hold the upstream business, which is the largest producer of natural gas in the United States based on average daily sales volume.

Production and Price Realization

Sales volume rose to 394 billion cubic feet equivalent (Bcfe) of natural gas from the year-ago quarter’s tally of 294 Bcfe. Also, the figure exceeded the guidance. Average realized price of natural gas equivalents was $3.13 per thousand cubic feet, up 3% from $3.04 a year ago.

Expenses

Total cash operating expenses were $1.53 per unit in the fourth quarter of 2018 compared with $1.59 in the prior-year quarter. Processing expenses were 9 cents during the fourth quarter of 2018 compared with 16 cents in the fourth quarter of 2017.

Financials

The company’s adjusted operating cash flow was $692.6 million during the quarter, up from $465.4 million a year ago. EQT Corp’s capital expenditures totaled around $558 million in the fourth quarter.

Wells Drilled

The company spud 133 gross wells in 2018. Of the total, 104 wells were drilled in the PA Marcellus with an average length-of-pay of 11,700 feet, 12 were drilled in the WV Marcellus with an average length-of-pay of 5,500 feet and 17 were drilled in Utica with an average length-of-pay of 12,400 feet.

Reserves Replacement

At the end of 2018, oil and gas proved reserves were 21.8 trillion cubic feet equivalent (Tcfe), up about 2% from 2017. Adjusting for the impact of the divestitures in 2018, the company’s proved reserves increased 11%or 2.1 Tcfe and proved developed reserves increased 21%. The company had11.6Tcfe of proved developed reserves as of Dec 31, 2018.

Guidance

Production sales volume for 2019 is expected in the range of 1,470-1,510 Bcfe. Liquids volume is projected in the band of 8,200-8,400 thousand barrels (MBBl). Of this, first-quarter 2019 volume is estimated in the range of 360-380 Bcfe with liquids of 1,985-2,085 MBBls.

The company projects 2019 gathering costs and selling, general and administration (SG&A) costs in the range of 55-57 cents per Mcfe and 11-13 cents per Mcfe, respectively.

Adjusted operating cash flow for 2019 is expected in the range of $2.2 -$2.3 billion.

Zacks Rank & Key Picks

EQT carries a Zacks Rank #3 (Hold).

A few better-ranked players in the energy space are Evergy, Inc (NYSE:EVRG) , Canadian Solar Inc (NASDAQ:CSIQ) and Contura Energy (NYSE:CTRA) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Evergy, through its operating subsidiaries — Kansas City Power & Light Company (KCP&L) and Westar Energy, Inc — provides clean, safe and reliable energy in Kansas and Missouri. The company delivered average negative earnings surprise of 11.1% in the last four quarters.

Headquartered in Ontario, Canada, Canadian Solar operates as a vertically integrated manufacturer of silicon ingots, wafers, cells, solar modules (panels) and custom-designed solar power applications. The company is expected to witness year-over-year earnings growth of 67.5% in 2018.

Bristol-based Contura Energy is a mining company. The company reported average negative surprise of 17.9% in the trailing four quarters.

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