10-QPeriod: Q2 FY2002

EQT Corp Quarterly Report for Q2 Ended Jun 30, 2002

Filed August 8, 2002For Securities:EQT

Summary

Equitable Resources, Inc. (EQT) reported a net income of $38.2 million, or $0.59 per diluted share, for the second quarter of 2002, a notable increase from $31.4 million, or $0.47 per diluted share, in the same period of 2001. This improvement was driven by several factors, including a significant gain from discontinued operations, increased natural gas throughput due to colder weather in the Equitable Utilities segment, and effective cost reduction initiatives across all business units. The company also benefited from the absence of a workforce reduction charge incurred in the prior year. However, the results were partially tempered by a $5.3 million impairment charge related to the Jamaica power plant project within the NORESCO segment and reduced income from oil-dominated fields sold in 2001. The Equitable Production segment also experienced a decline due to lower commodity prices and reduced production volumes. Despite these headwinds, the company's strategic focus on storage and asset management within the Equitable Utilities segment, coupled with disciplined cost management, positions it to navigate the volatile energy market.

Key Highlights

  • 1Net income increased to $38.2 million ($0.59/share) in Q2 2002 from $31.4 million ($0.47/share) in Q2 2001.
  • 2A $9.0 million gain from discontinued operations positively impacted net income.
  • 3The NORESCO segment recorded a $5.3 million impairment charge for the Jamaica power plant project.
  • 4The Equitable Utilities segment saw improved EBIT due to colder weather and cost reductions, partially offset by lower distribution revenues in the six-month period.
  • 5The Equitable Production segment experienced lower EBIT due to decreased commodity prices and the sale of oil-dominated fields.
  • 6Cash flow from operating activities significantly increased by $47.8 million year-over-year for the first six months of 2002.
  • 7The company declared a regular quarterly cash dividend of $0.17 per share.

Frequently Asked Questions

The primary drivers for the increase in net income were a $9.0 million gain from discontinued operations, increased throughput in the Equitable Utilities segment due to colder weather, and ongoing cost reduction initiatives across the company. The absence of a workforce reduction charge from the prior year also contributed to the improved year-over-year comparison.

The NORESCO segment recorded a $5.3 million impairment charge related to the Jamaica power plant project. This was due to the plant not operating at expected levels and remediation efforts being ineffective. This write-down impacted the segment's profitability for the quarter.

The sale of oil-dominated fields in December 2001 resulted in a decrease in production volumes and consequently impacted the revenue and EBIT of the Equitable Production segment. While this aligns with the company's strategy to focus on natural gas, it led to lower commodity sales and income for the reporting period compared to the prior year.

The company's objective for its hedging program is to protect earnings from commodity price volatility. They aim to provide price protection for a majority of expected production for several years using a mix of derivative instruments that create price floors while allowing participation in upward price movements. They also use basis swaps and have hedged natural gas basis exposure.