EQT Provides Update On 2019 Capex, Production And Operations

EQT Corporation (NYSE:EQT) released operational and capital expenditure forecasts for 2019. The company also outlined plan to lower costs and increase efficiency.

The company projects capital expenditure for 2019 in the range of $1.9-$2 billion, of which $1.6 billion will be allocated toward reserve development.

The production sales volume for 2019 is estimated in the range of 1,470-1,510 billion cubic feet equivalent (Bcfe). Liquids sales volume is expected in the range of 8,130-8,330 thousand barrels (Mbbls), while ethane sales volume is projected in the range of 5,780-5,980Mbbls.

For 2020, EQT projects 5% increase in production sales volume based on the 2019 drilling program. Moreover, the company is carrying out organizational changes as part of its effort to improve operational efficiencies and lower costs. These initiatives are likely to lower annual capital costs by an incremental 10% by 2020 and $50 million annually. EQT has also recognized annual reductions in administrative and well development costs of $100 million.

In 2019, the company plans to focus on the Marcellus acreage, with a target of 91 wells in Pennsylvania and 15 wells in West Virginia. About 106 wells are planned for drilling in the region, with around 124 wells to be turn-in-line (TIL).

In Ohio Utica Development, the company intends to drill 20 net wells and 23net wells are expected to be TIL during 2019. The rigs to be employed in the Marcellus and Utica are projected at 6-8.

In 2019, selling, general and administrative (SG&A) expenses as well as gathering costsare estimated in the range of 11-13 cents and 55-57 cents per unit, respectively. For 2019, adjusted operating cash flow is estimated in the range of $2.2-$2.3 billion. This includes dividends from Equitrans Midstream Corporation. For 2019, adjusted free cash flow is estimated at $350 million.

During the fourth quarter of 2018, EQT’s production was 394 Bcfe, up 5% compared with the third quarter. Production in 2018 surpassed forecast at 1,488 Bcfe or 1,447 Bcfe adjusted for assets divested during the year. Capex for 2018 was in line with the recent guidance of $2.5 billion, while free cash flow at the end of the fourth quarter of 2018 is projected to be about $100 million.

EQT is also on the lookout for a chief operating officer and has shortlisted a few highly-qualified external candidates for the role. The company is likely to announce the appointment during the first quarter of 2019.

Zacks Rank & Stocks to Consider

EQT currently carries a Zacks Rank #3 (Hold).

A few better-ranked players in the energy space are NextEra Energy (NYSE:NEE) Partners L.P. (NYSE:NEP) , Sunoco L.P (NYSE:SUN) and TransCanada Corporation (TO:TRP) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Based in Juno Beach, Florida, NextEra Energy Partners was formed by NextEra Energy, Inc in 2014 to acquire, manage and own contracted clean energy projects with stable long-term cash flows. The partnership delivered average positive earnings surprise of 99.1% in the last four quarters.

Headquartered in Houston, TX, Sunoco operates as a wholesale fuel distributor. The company is expected to witness year-over-year earnings decline of 38.9% in 2018.

Calgary, Alberta-based TransCanada Corporation is a premier energy infrastructure provider in North America. The company generated average positive surprise of 19.1% in the trailing four quarters.

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