) third quarter 2012 adjusted earnings decreased 46.7% year over
year to 24 cents and missed the Zacks Consensus Estimate of 30
cents. The underperformance was primarily due to a 29% reduction
in the average wellhead sales price.
EQT MIDSTRM PTR (EQM): Free Stock Analysis
EQT CORP (EQT): Free Stock Analysis Report
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Net operating revenue in the quarter was up almost 0.35% year
over year to $329.7 million. However, reported revenue fell short
of the Zacks Consensus Estimate $349.0 million.
Net operating expense in the quarter surged 25.8% year over year
to $243.7 million.
's third quarter operating revenue decreased 5.9% year over year
to $195.3 million as realized price fell 29%.
Operating income dropped 61.2% year over year to $38.3 million.
segment, net gathering revenue surged 22% year over year to $77.0
million, owing to a 30% growth in gathered volumes. Net
transmission revenues increased 45%. Net storage, marketing and
other operating revenues averaged $5.4 million, representing a
$7.0 million decline.
Operating income plunged 77% year over year to $51.0 million in
the reported quarter.
's net operating revenue dropped 5.9% year over year to $25.4
The segment generated an operating income of $0.7 million versus
the year-ago level of $2.5 million.
The company's operating cash flow was $176.2 million during the
quarter, reflecting a decrease of 7.8% year over year.
EQT's capital expenditure totaled $361.2 million in the quarter,
with $255.2 million spent on EQT Production, $97.1 million on EQT
Midstream and $8.2 million on EQT Distribution.
The company has increased its full-year 2012 volume guidance to
257 Bcfe from its previous forecast of 250 to 255 Bcfe. The new
full-year guidance is 32% higher than 2011. In addition, it
expects 2013 volume of 335 Bcfe, which is 30% higher than the
2012 forecasted volumes.
Earlier, the company had estimated its overall capex to remain at
$1,300 million for the year.
We reiterate our long-term Neutral recommendation for EQT.
EQT Corporation 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.
With an increasing reserve structure and stellar Marcellus
results (Marcellus sales volumes were up 85% year over year in
the third quarter), we believe that the company exhibits
industry-leading organic growth momentum.
Moreover, management's continuous efforts to derive value by
monetizing midstream assets will likely accelerate exploration
and production growth. The company also maintained its goal to
drill 132 Marcellus wells this year.
Recently, EQT also formed a master limited partnership (MLP) −
EQT Midstream Partners, L.P.
) − that would own selective interstate pipeline assets. EQT
Midstream Partners completed its IPO of 14,375,000 common units
at $21.00 per common unit.
Following the IPO, EQT obtained $232 million cash, and holds a
57.4% limited partner interest in the partnership and a 2%
general partner interest.
Proceeds of the IPO will likely to be used to finance further
acceleration of EQT's Marcellus development. The MLP is
anticipated to focus on providing transmission and gathering
services to producers in the Marcellus Shale, including EQT
Production Company. This will help the company to focus on other
areas of the business.
Again, recently, the company sold its limited partner interest in
the MLP to own portions of the assets of Equitrans, L.P., EQT's
interstate pipeline subsidiary. Hence, EQT now owns the general
partner of the MLP that will in turn provide the company with
incentive distribution rights and a substantial portion of the
MLP's common units.
However, EQT lacks a geographically diversified asset base, as
its resources are concentrated in the Appalachian Basin. Any
potential disruption in the region will adversely affect the
The company holds a Zacks #3 Rank, which translates to a
short-term Hold rating.