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Summary EQT Corporation has watched its stock price drop by more than 50% since the start of the oil crash. For an oil company, the company’s dividend is negligible dividend. At the same time, the company’s natural gas production is growing rapidly bringing increasing earnings. Introduction EQT Corporation (NYSE: EQT ) is one of the largest natural gas producers in the Appalachian Basin. The company is headquartered in Pennsylvania and operates throughout the Appalachian mounts. The company has significant stakes in the natural gas fields there. EQT Corporation – RMUS Entry Media EQT Corporation has had a difficult time recently. The company has seen its stock price drop from $110 per share before the oil crash in mid-2014 down to recent lows of just over $50. At the same time, the company has a negligible dividend yield of 0.23% compared to a dividend yield almost 7 times that in 2012. Investment Highlight s Now that we have talked about the company, let us now talk some about the company’s investment highlights. The company has 10.7 trillion cubic feet of proven reserves amounting to 22 years of production at the current rate. At the same time the company has 42.8 trillion cubic feet of 3P reserves amounting to more than 87 years. On top of that, the company has a proven ability to increase its reserves with a > 25% forecasted production volume sales growth for the year of 2015. At the same time, the company has a 90% interest in EQGP (NYSE: EQGP ) which has a $4.8 billion market cap and has dropped almost 40% since the start of the crash. Lastly the company has a strong equity position. The company has $1.7 billion in cash along with a $1.5 billion undrawn credit revolver. The company’s cash position amounts to approximately $10.6 per share, impressive for a company in such difficult times. (click to enlarge) EQT Resources – EQT Investor Presentation The above image shows the company’s resources along with its impressive acreage and midstream assets. The company’s 9100 pipeline miles and 3.4 million acres leave significant room for the company to explore. These explorations could significant increase the company’s reserves. Production Growth Now that we have talked about the company’s investment highlights, it is time to talk about the company’s production growth. (click to enlarge) Marcellus Shale Production – EQT Investor Presentation The above image shows the company’s Marcellus Shale play which has impressive growth potential. The company began horizontal drilling on the area in 2008 and has seen 32% year over year growth since then. That has resulted in production growing from 200 million cubic feet a day from 2008 up to 1800 million cubic feet per day in 2015. (click to enlarge) EQT Proven Reserves – EQT Investor Presentation The company’s proven reserves have also impressive grown as a result of the company’s Marcellus shale assets. The company’s reserves in the Marcellus have grown from 2.879 billion cubic feet in 2010 to 8.284 billion feet in 2014. The company’s Marcellus assets also make up more than 50% of its 3P reserves. (click to enlarge) EQT Development Area – EQT Investor Presentation The company is currently focused on developing its core Marcellus assets with much if it focused in a core development area. This area contains 600,000 acres along with an impressive 23.3 trillion cubic feet or 3P reserves of 31 trillion cubic feet of total resource potential. At the same time the company drilled 138 wells in 2015 and plans on continue drilling additional wells. (click to enlarge) EQT Production Costs – EQT Investor Presentation At the same time, the Marcellus plays, the company’s largest assets have impressive fundamentals even after taxes. The company’s current margins after tax at $2.5 natural gas are 22%. With current natural gas prices at $2.05 the company should barely be breaking even. (click to enlarge) EQT Operating Expenses – EQT Investor Presentation However, the company has been maintaining noticeably lower operating costs compared to the rest of its peers. The company’s per-unit operating expenses are the lowest among its peers while the company’s 3-year F&D costs are the fourth rank among its peer group. Conclusion EQT Corporation has had a difficult time recently watching its stock price drop more than 50% since the start of the original stock market crash. At the same time, the company offers a negligible dividend of roughly 0.23% per year. As a result, I do not recommend investors get involved for the dividend. However, the company has an impressive Marcellus asset play with millions of acres and tens of trillions of cubic feet worth of reserves. The company drilled over 150 wells in 2015 and plans to continue drilling a large number of additional wells that could increase its reserves. For investors interested in averaging into a strong position at a low prices, EQT Corporation is a strong corporation with huge potential. Those who get into now and average down should see impressive long term gains. Scalper1 News
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