10-QPeriod: Q3 FY2010

EQT Corp Quarterly Report for Q3 Ended Sep 30, 2010

Filed October 28, 2010For Securities:EQT

Summary

EQT Corporation's Q3 2010 report shows a significant turnaround in profitability compared to the prior year's third quarter, with net income rising to $36.5 million ($0.24 EPS) from $2.9 million ($0.02 EPS) in Q3 2009. This improvement was driven by strong performance across its segments, particularly EQT Production and EQT Midstream, which benefited from increased natural gas and NGL sales volumes and higher prices for NGLs. The company also saw a reduction in certain operating expenses, including lower exploration costs and a favorable comparison related to long-term compensation accruals from the prior year. For the nine-month period, net income also saw a substantial increase to $154.6 million ($1.07 EPS) from $101.5 million ($0.77 EPS) in the comparable period of 2009. The company's strategic investments, including the acquisition of Marcellus Shale acreage and increased drilling activity, are beginning to yield positive results. EQT also successfully raised capital through an equity offering in March 2010, strengthening its financial position and funding its aggressive development plans, particularly in the Marcellus and Huron/Berea Shale plays.

Financial Highlights

42 data points
Beta

Net Income

$36.52M

EPS (Diluted)

$0.24

Total Assets

$6.93B

Cash & Equivalents

$197.37M

Free Cash Flow

-$195.68M

Financial Statements
Beta
SG&A Expenses$34.33M
Operating Expenses$169.15M
Operating Income$88.18M
Interest Expense$33.86M
Net Income$36.52M
EPS (Basic)$0.24
EPS (Diluted)$0.24
Shares Outstanding (Basic)149.13M
Shares Outstanding (Diluted)149.78M

Key Highlights

  • 1Significant year-over-year increase in quarterly net income ($36.5M vs $2.9M) and EPS ($0.24 vs $0.02).
  • 2Nine-month net income grew to $154.6M ($1.07 EPS) from $101.5M ($0.77 EPS) in the prior year.
  • 3Increased natural gas and NGL sales volumes across EQT Production and EQT Midstream segments.
  • 4Acquisition of approximately 48,000 net acres in the Marcellus Shale in Q2 2010 for $260.2 million (90% EQT stock).
  • 5Completion of a $537.2 million equity offering in March 2010 to fund development in the Marcellus and Huron/Berea Shale plays.
  • 6EQT Midstream completed Phase 1 of the Equitrans Marcellus Expansion Project, adding significant delivery capacity.
  • 7Reduced operating expenses, including lower exploration costs and a favorable year-over-year comparison for compensation expense.

Frequently Asked Questions

The substantial increase in net income was primarily driven by higher natural gas and NGL sales volumes from EQT Production and EQT Midstream, respectively. Favorable NGL prices, reduced exploration expenses, and a favorable comparison related to long-term compensation accruals from the prior year also contributed to the improved profitability.

EQT has been actively investing in the Marcellus Shale, including a significant acreage acquisition in Q2 2010 and increased drilling activity. This strategic focus has led to increased production volumes and revenue growth, particularly within the EQT Production and EQT Midstream segments, contributing to the overall improved financial results.

EQT is forecasting approximately $1.2 billion in capital expenditures for 2010 (excluding acquisitions). The company plans to use these funds to accelerate development of its Marcellus and Huron/Berea Shale plays, driven by increased drilling and infrastructure expansion projects, as indicated by the ongoing Equitrans Marcellus Expansion Project.

EQT employs a hedging program using derivative instruments such as futures contracts, swap agreements, collar agreements, and options to manage exposure to natural gas and NGL price volatility. The company aims to ensure an adequate level of return for its investments by hedging a portion of its forecasted production.