10-QPeriod: Q1 FY2010

EQT Corp Quarterly Report for Q1 Ended Mar 31, 2010

Filed April 28, 2010For Securities:EQT

Summary

EQT Corporation's (EQT) first quarter 2010 report shows a significant increase in net income to $88.1 million, or $0.65 per diluted share, from $72.0 million, or $0.55 per diluted share, in the prior year period. This improvement was driven by higher natural gas sales volumes, increased NGL prices, and rate increases in the distribution segment, partially offset by higher depletion expenses and interest charges. A key strategic development was the announced acquisition of approximately 58,000 net acres in the Marcellus Shale for $280 million, to be paid 90% in EQT stock and 10% in cash, significantly expanding the company's footprint in this key play. Furthermore, EQT completed a successful public offering of common stock, raising $527.7 million in net proceeds, which are earmarked for accelerating development in the Marcellus Shale and Huron/Berea plays.

Financial Highlights

42 data points
Beta

Net Income

$88.06M

EPS (Diluted)

$0.65

Total Assets

$6.56B

Cash & Equivalents

$553.03M

Free Cash Flow

$57.89M

Financial Statements
Beta
SG&A Expenses$39.21M
Operating Expenses$267.53M
Operating Income$169.11M
Interest Expense$34.13M
Net Income$88.06M
EPS (Basic)$0.66
EPS (Diluted)$0.65
Shares Outstanding (Basic)134.08M
Shares Outstanding (Diluted)135.01M

Key Highlights

  • 1Net income increased by 22.3% year-over-year to $88.1 million ($0.65/diluted share) in Q1 2010, driven by higher production volumes and commodity prices.
  • 2EQT Production segment revenues grew 31.9% to $129.0 million due to increased natural gas sales volumes and a slight increase in average well-head sales price.
  • 3EQT Midstream segment operating income rose 37.4% to $67.3 million, benefiting from higher NGL sales prices and increased gathering/processing volumes.
  • 4The company announced a significant acquisition of 58,000 net acres in the Marcellus Shale for $280 million, bolstering its position in a key growth area.
  • 5EQT successfully raised $527.7 million in net proceeds from a public stock offering to fund accelerated development of its Marcellus Shale and Huron/Berea plays.
  • 6Cash flows from operating activities increased significantly to $275.4 million, boosted by a $121.5 million income tax refund from a net operating loss carryback.
  • 7The company's revolving credit facility remains largely undrawn, with no outstanding loans as of March 31, 2010, indicating a strong liquidity position.

Frequently Asked Questions

Revenue and net income growth were primarily driven by increased natural gas production volumes across the EQT Production segment, higher Natural Gas Liquids (NGL) sales prices in the EQT Midstream segment, and base rate increases for residential customers in the Distribution segment. These positive factors were partially offset by increased depletion expenses and higher interest charges due to recent debt issuance.

EQT announced its intention to acquire approximately 58,000 net acres in the Marcellus Shale for $280 million. The transaction will be financed with 90% EQT stock and 10% cash. This acquisition is expected to significantly expand EQT's acreage position in the high-pressure Marcellus Shale fairway, enhancing its long-term growth prospects in this key shale play.

EQT utilizes derivative commodity instruments, including futures contracts, swap agreements, collar agreements, and options, to hedge against volatility in natural gas and NGL prices. These instruments are primarily designated as cash flow hedges to ensure an adequate level of return for its development and infrastructure investments. As of March 31, 2010, the company had price protection for approximately 34% of its expected natural gas production sales volumes for 2010.

EQT completed a public offering of its common stock in March 2010, raising approximately $527.7 million in net proceeds. This capital infusion strengthens the company's liquidity and provides funding to accelerate the development of its Marcellus Shale and Huron/Berea plays, supporting future growth initiatives.