01—Abstract
Summary
Summary of the 10-K filed February 14, 2019. Cited figures are marked; the original filing is the authoritative source.
EQT Corporation, a leading natural gas producer, reported its 2018 financial and operational results, highlighting a significant transformation driven by strategic divestitures and the separation of its midstream business.
The company's core strategy focuses on cost reduction, capital efficiency, and returning value to shareholders, positioning itself as a premier producer of low-cost, environmentally friendly natural gas. Despite a substantial loss from continuing operations in 2018, largely due to impairments and asset sales totaling $3.5 billiona, EQT generated significant operating revenues from its core Appalachian Basin assets.
The company completed the separation of its midstream business into Equitrans Midstream Corporation and a significant divestiture of non-core assets in the Permian Basin and Huron play. Looking ahead, EQT anticipates continued production growth and substantial free cash flow generation, funded by operational cash flow, with a 2019 capital expenditure budget of approximately $1.8 billionb focused on reserve development and land acquisitions.
02—Key points
Key Highlights
- EQT Corporation is the largest natural gas producer in the United States, with extensive acreage in the Appalachian Basin.
- The company completed the separation of its midstream business into Equitrans Midstream Corporation and divested non-core Permian Basin and Huron play assets, streamlining operations.
- Total operating revenues increased to $4.56 billion in 2018 from $3.09 billion in 2017, driven by higher sales volumes.
- A significant loss from continuing operations of $2.38 billion in 2018 was primarily due to $3.5 billion in impairments and losses on asset sales.
- Proved reserves stood at 21.8 Tcfe as of December 31, 2018, with 87% concentrated in the Marcellus play.
- The company maintained investment grade credit ratings from Moody's, S&P, and Fitch at year-end 2018.
- EQT expects 2019 capital expenditures of approximately $1.8 billion, primarily for reserve development and land acquisitions.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2018, Eqt lost $0.48.
- Revenue$4.71B100.0%
- Cost of revenue−$1.70B36.0%
- Gross profit$3.01B64.0%
- Operating costs−$5.80B123.1%
- Operating income−$2.78B59.1%
- Interest, other & tax$538.6M11.4%
- Net income−$2.24B47.7%
04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 14, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $4.71B$3.09B | +52.4% |
| Cost of Revenue | $1.70B$1.16B | +45.7% |
| Gross Profit | $3.01B$1.93B | +56.4% |
| SG&A Expenses | $232.54M$208.99M | +11.3% |
| Operating Expenses | $7.34B$2.71B | +171.0% |
| Operating Income | -$2.78B$382.21M | −828.2% |
| Interest Expense | $228.96M$167.97M | +36.3% |
| Net Income | -$2.24B$1.51B | −248.8% |
| EPS (Basic) | $-8.60$8.05 | −206.8% |
| EPS (Diluted) | $-8.60$8.04 | −207.0% |
| Shares Outstanding (Basic) | 260.93M187.38M | +39.3% |
| Shares Outstanding (Diluted) | 260.93M187.73M | +39.0% |
05—Questions
Frequently Asked Questions
What were the major strategic actions taken by EQT in 2018?
In 2018, EQT Corporation completed the separation of its midstream business into Equitrans Midstream Corporation and divested its non-core Permian Basin and Huron play assets. These actions were aimed at streamlining the company's focus on its core natural gas production business in the Appalachian Basin.
How did EQT's financial performance change in 2018 compared to 2017?
Total operating revenues increased to $4.56 billion in 2018 from $3.09 billion in 2017, primarily due to a 68% increase in sales volumes. However, EQT reported a significant loss from continuing operations of $2.38 billion in 2018, compared to income from continuing operations of $1.39 billion in 2017. This was largely due to $3.5 billion in impairments and losses on the sale of long-lived assets, including those related to the 2018 divestitures.
What is EQT's strategy moving forward?
EQT's strategy focuses on being a premier producer of environmentally friendly, reliable, low-cost natural gas. Key priorities include reducing costs, improving operational and capital efficiency, consistently delivering production volumes, and prioritizing the return of capital to shareholders while strengthening its balance sheet. The company aims for mid-single-digit year-over-year production growth and substantial free cash flow.
What are EQT's key reserve holdings?
As of December 31, 2018, EQT held 21.8 Tcfe of proved natural gas, NGLs, and crude oil reserves. The vast majority, approximately 87% by volume, or 19.1 Tcfe, were concentrated in the Marcellus play, highlighting the company's significant position in this resource-rich area.
06—Continue