10-KPeriod: FY2016

EQT Corp Annual Report, Year Ended Dec 31, 2016

Filed February 9, 2017For Securities:EQT

Summary

EQT Corporation's 2016 10-K filing reveals a significant production increase, with record annual sales volumes, up 26% year-over-year, driven by a 31% rise in Marcellus volumes. This growth was achieved despite a 20% decrease in the average realized price for natural gas, NGLs, and oil, which fell to $2.47 per Mcfe. The company expanded its Marcellus acreage by approximately 145,500 net acres, bolstering its reserve base. Financially, EQT Production reported an operating loss of $719.7 million for 2016, a substantial decline from the $132.0 million operating income in 2015, primarily due to lower realized prices and a significant loss on derivatives not designated as hedges. The company raised approximately $1.2 billion in net proceeds through two public stock offerings to fund its operations and growth initiatives. The midstream segments, EQT Gathering and EQT Transmission, both experienced revenue and operating income growth, supported by increased volumes and infrastructure development, including the Ohio Valley Connector pipeline project. Overall, while production volumes are strong, the company's profitability in 2016 was heavily impacted by lower commodity prices and derivative accounting impacts. Investors should note the company's strategic focus on expanding its Marcellus acreage and its continued investment in midstream infrastructure via EQM.

Financial Highlights

53 data points
Beta

Revenue

$1.39B

36.5% Gross Margin

Net Income

-$452.98M

-32.7% Net Margin

EPS (Diluted)

$-2.71

Total Assets

$15.47B

Cash & Equivalents

$1.10B

Free Cash Flow

$121.51M

Financial Statements
Beta
Revenue$1.39B
Cost of Revenue$880.19M
Gross Profit$506.86M
SG&A Expenses$218.95M
Operating Expenses$2.15B
Operating Income-$755.03M
Interest Expense$131.16M
Net Income-$452.98M
EPS (Basic)$-2.71
EPS (Diluted)$-2.71
Shares Outstanding (Basic)166.98M
Shares Outstanding (Diluted)166.98M

Key Highlights

  • 1Record annual production sales volumes increased by 26% to 759.0 Bcfe, with Marcellus volumes up 31%.
  • 2Average realized price decreased by 20% to $2.47 per Mcfe due to lower commodity prices.
  • 3Acquired approximately 145,500 net Marcellus acres, primarily in West Virginia and Pennsylvania.
  • 4EQT Production reported an operating loss of $719.7 million for 2016, down from an operating income of $132.0 million in 2015.
  • 5Completed two public stock offerings, raising approximately $1.2 billion in net proceeds.
  • 6EQM placed the Ohio Valley Connector pipeline into service, enhancing transmission capacity.
  • 7Total proved reserves increased to 13.5 Tcfe as of December 31, 2016, a significant rise from the previous year, largely due to acquisitions.

Frequently Asked Questions

In 2016, EQT achieved record production sales volumes, increasing by 26% to 759.0 Bcfe, with Marcellus volumes showing a 31% rise. However, the average realized price decreased by 20% to $2.47 per Mcfe, reflecting the challenging commodity price environment.

EQT significantly grew its asset base by acquiring approximately 145,500 net acres in the Marcellus Shale, primarily in northern West Virginia and southwestern Pennsylvania. Additionally, its midstream subsidiary, EQM, placed the Ohio Valley Connector pipeline into service, enhancing its transmission infrastructure.

Lower commodity prices, down 20% year-over-year, significantly impacted EQT's average realized price. The company also reported a substantial loss on derivatives not designated as hedges in 2016, which contributed to the EQT Production segment's operating loss of $719.7 million, contrasting with an operating income in the prior year.

EQT funded its operations and growth through a combination of cash flows from operations and capital raised through financial activities. Notably, the company completed two public stock offerings that generated approximately $1.2 billion in net proceeds.