10-QPeriod: Q1 FY2002

EQT Corp Quarterly Report for Q1 Ended Mar 31, 2002

Filed May 8, 2002For Securities:EQT

Summary

EQT Corp.'s (EQT) first quarter 2002 results show a notable decline in net income and earnings per share compared to the prior year. Net income fell to $52.4 million ($0.80 per diluted share) from $71.3 million ($1.08 per diluted share) in Q1 2001. This decline is primarily attributed to lower commodity prices impacting the production segment and decreased throughput in the utility segment due to warmer weather. The company also experienced a significant equity loss in its investment in Westport Resources, shifting from a gain in the prior year. Despite lower overall profitability, EQT demonstrated resilience through cost reduction initiatives across its segments and improved marketing margins by focusing on storage and asset management. Capital expenditures increased significantly, driven by accelerated drilling programs in the production segment. The company continues to manage its liquidity effectively, with strong operating cash flows supporting its operations and financing activities, including share buybacks. EQT also announced a slight increase in its quarterly dividend.

Key Highlights

  • 1Net income decreased by 26.5% to $52.4 million in Q1 2002 compared to $71.3 million in Q1 2001.
  • 2Diluted earnings per share dropped to $0.80 from $1.08 year-over-year.
  • 3The decrease in earnings was mainly due to lower commodity prices in the production segment and reduced utility throughput from warmer weather.
  • 4Equity loss in Westport Resources was $4.2 million in Q1 2002, a reversal from a $11 million gain in Q1 2001.
  • 5Total operating revenues decreased significantly to $344.1 million from $851.2 million, largely due to lower energy prices.
  • 6Capital expenditures increased substantially to $37.1 million from $14.2 million, driven by accelerated drilling in the production segment.
  • 7The company declared a regular quarterly cash dividend of $0.17 per share, a 6.25% increase.

Frequently Asked Questions

The primary reasons for the decline are lower commodity prices realized in the Equitable Production segment and decreased throughput in the Equitable Utilities segment due to warmer-than-usual weather. Additionally, the company recorded an equity loss in its investment in Westport Resources, which was a gain in the prior year's quarter.

EQT implemented ongoing cost reduction initiatives across its business units, leading to lower total expenses. In the Equitable Utilities segment, the company refocused its marketing activities on storage and asset management, improving unit marketing margins despite a decrease in gross revenues. The Equitable Production segment also benefited from lower operating costs per Mcfe.

Capital expenditures for the first three months of 2002 were $37.1 million, a significant increase from $14.2 million in the prior year. This increase is driven by a more accelerated developmental drilling program in the Equitable Production segment. The company believes these expenditures will be consistent with previously reported forecasts.

EQT employs a hedging strategy to protect earnings from price volatility. The company uses derivative instruments like costless collars, straight floors, and fixed price swaps to establish a price floor while allowing participation in upward price movements. As of March 31, 2002, EQT had hedged approximately 3 Bcf of natural gas for the current quarter and increased its 2003 hedge position to approximately 42 Bcf.