Integrated energy player,
) announced that it has divested its natural gas distribution
business, Equitable Gas Company, LLC, to Peoples Natural Gas. Per
the agreement, EQT received a cash payment of approximately $740
million. The divestment is a smart move by EQT as it has brought
home the much-needed capital to continue investing in its core
We remain optimistic on EQT's strategy of divesting the expensive
yet less profitable assets and concentrate on more cost-effective
and lucrative investment opportunities. EQT's move to sell its
gas distribution utility sale to privately held Peoples Natural
Gas and the transfer of certain pipeline assets owned by Peoples
are also in sync with its strategic focus to become a production
and pipeline energy company beyond 2013.
EQT is a low-cost producer with a strategic midstream presence.
The company's superior cost structure and above-average growth
may alleviate concerns related to struggling natural gas prices.
With an increasing reserve structure and the projected higher
number of Marcellus wells to be drilled in the coming five years,
we believe that the company exhibits industry-leading organic
EQT increased its 2013 production sales volume guidance to 366
Bcfe from its earlier guidance of 360-365 Bcfe, representing an
estimated 42% rise year over year. The company has also initiated
2014 production expectations at 445 Bcfe, representing an
estimated 22% rise year over year, taking the mid-point of the
guided range. The Marcellus is expected to remain EQT's esteemed
asset and a potential Upper Devonian/Utica program will likely
complement its growth.
Based in Pittsburgh, Pennsylvania, EQT Corp. is an integrated
energy company with an emphasis on natural gas supply activities
in the Appalachian area, including production and gathering,
natural gas distribution and transmission and, energy efficiency
solutions, primarily in the eastern and western coastal regions
of the United States.
However, EQT remains highly exposed to volatile natural gas
fundamentals and weak commodity prices, which might result in a
lower-than-expected performance. EQT's various multilateral
drilling programs across its oil and gas fields face operational
headwinds, such as rising service costs, completion delays and
EQT holds a Zacks Rank #3 (Hold), implying that it is expected to
perform in line with the broader U.S. equity market over the next
one to three months.
Meanwhile, one can consider better-ranked energy sector stocks
Abraxas Petroleum Corp.
Clayton Williams Energy, Inc.
Harvest Natural Resources Inc.
). All these stocks presently sport a Zacks Rank #1 (Strong Buy).
ABRAXAS PETE/NV (AXAS): Free Stock Analysis
WILLIAMS(C)ENGY (CWEI): Free Stock Analysis
EQT CORP (EQT): Free Stock Analysis Report
HARVEST NATURAL (HNR): Free Stock Analysis
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