10-QPeriod: Q1 FY2014

EQT Corp Quarterly Report for Q1 Ended Mar 31, 2014

Filed April 24, 2014For Securities:EQT

Summary

EQT Corporation's Q1 2014 results show a significant improvement in financial performance compared to the prior year, driven by strong operational execution and favorable market conditions in the natural gas sector. Income from continuing operations attributable to EQT Corporation more than doubled year-over-year, reaching $192.3 million, or $1.26 per diluted share. This growth was fueled by a substantial increase in both natural gas and NGL volumes sold, coupled with a higher average effective sales price, which benefited from favorable market access achieved through expanded transportation capacity. The company's EQT Production segment saw robust revenue growth, largely due to increased production from its Marcellus play and higher realized prices. EQT Midstream also demonstrated solid performance with increased gathering and transmission revenues, benefiting from higher volumes and new infrastructure. While capital expenditures increased to support development activities, the company generated strong operating cash flows, indicating a healthy financial position. Investors should note the continued focus on developing the company's core assets and strategic midstream infrastructure investments.

Financial Highlights

41 data points
Beta

Net Income

$192.19M

EPS (Diluted)

$1.26

Total Assets

$10.25B

Cash & Equivalents

$909.80M

Free Cash Flow

$475.86M

Financial Statements
Beta
SG&A Expenses$48.97M
Operating Expenses$304.83M
Operating Income$356.79M
Interest Expense$31.97M
Net Income$192.19M
EPS (Basic)$1.27
EPS (Diluted)$1.26
Shares Outstanding (Basic)151.37M
Shares Outstanding (Diluted)152.76M

Key Highlights

  • 1Net income attributable to EQT Corporation surged to $192.2 million in Q1 2014 from $100.3 million in Q1 2013.
  • 2Diluted earnings per share from continuing operations rose to $1.26 in Q1 2014 from $0.43 in Q1 2013, a significant year-over-year increase.
  • 3Operating revenues increased substantially to $661.6 million in Q1 2014 from $415.9 million in Q1 2013, driven by higher sales volumes and prices.
  • 4EQT Production segment operating income increased dramatically to $277.2 million from $74.1 million, reflecting higher sales prices and volumes.
  • 5EQT Midstream segment operating income also grew to $83.1 million from $74.2 million, driven by increased transmission and gathering revenues.
  • 6Capital expenditures increased to $492.1 million in Q1 2014 from $298.3 million in Q1 2013, primarily focused on EQT Production's well development and EQT Midstream's infrastructure.
  • 7The company maintained a strong cash flow from operations, which increased to $461.6 million from $299.3 million, supporting increased capital investments.

Frequently Asked Questions

Revenue growth was primarily driven by a significant increase in both natural gas and NGLs sales volumes (up 30%) and a higher average effective sales price (up 28.4%). This was supported by increased production from the Marcellus play and expanded access to higher-priced markets due to increased firm transportation capacity.

The disposition of Equitable Gas and Equitable Homeworks was reflected as discontinued operations. For the three months ended March 31, 2014, there was a loss of $0.1 million from discontinued operations, compared to income of $35.0 million in the prior year period, reflecting the cessation of these operations.

EQT Corporation projected total capital investment of approximately $2.5 billion for 2014, with about $1.9 billion allocated to well development (drilling approximately 357 gross wells) and $0.6 billion to midstream infrastructure. The company anticipated production sales volume growth of approximately 25% for 2014.

The company employs a commodity risk management program primarily focused on hedging sales of its produced natural gas. This includes the use of derivative instruments such as NYMEX swaps, collars, and futures contracts, as well as fixed-price natural gas sales agreements, to protect cash flows from undue exposure to changing commodity prices. The company's objective is to hedge a significant portion of its expected production.