10-QPeriod: Q3 FY2016

EQT Corp Quarterly Report for Q3 Ended Sep 30, 2016

Filed October 27, 2016For Securities:EQT

Summary

EQT Corporation's third quarter 2016 results (ending September 30, 2016) show a net loss attributable to EQT Corporation of $8.0 million, or $0.05 per diluted share, a significant decrease from the net income of $40.8 million, or $0.27 per diluted share, in the same period of 2015. This decline was primarily driven by a 14% decrease in the average realized price for production sales volumes and reduced gains from derivatives not designated as hedges, along with higher operating expenses. The nine-month period ended September 30, 2016, also resulted in a net loss attributable to EQT Corporation of $261.0 million, or $1.58 per diluted share, a stark contrast to the net income of $219.8 million, or $1.44 per diluted share, in the comparable 2015 period. This substantial shift is largely due to a 26% decrease in the average realized price and a swing from gains to losses on derivatives not designated as hedges. Despite the top-line revenue decline and net loss, the company saw increased production sales volumes and higher gathering and transmission revenues, driven by its EQT Midstream segment. The company also completed significant equity offerings in 2016 to fund acquisitions, including the Statoil acquisition in July 2016, and several other acquisitions announced in October 2016, indicating a strategic focus on growth and asset acquisition amidst challenging commodity price environments.

Financial Highlights

45 data points
Beta

Net Income

-$8.02M

EPS (Diluted)

$-0.05

Total Assets

$14.89B

Cash & Equivalents

$1.76B

Free Cash Flow

-$97.29M

Financial Statements
Beta
SG&A Expenses$61.43M
Operating Expenses$448.27M
Operating Income$108.46M
Interest Expense$35.98M
Net Income-$8.02M
EPS (Basic)$-0.05
EPS (Diluted)$-0.05
Shares Outstanding (Basic)172.87M
Shares Outstanding (Diluted)172.87M

Key Highlights

  • 1EQT Corporation reported a net loss of $8.0 million for Q3 2016, a significant decline from a net income of $40.8 million in Q3 2015, primarily due to lower realized commodity prices and derivative impacts.
  • 2For the nine months ended September 30, 2016, the company reported a net loss of $261.0 million, compared to a net income of $219.8 million in the same period of 2015, reflecting challenging market conditions.
  • 3Total operating revenues decreased by 4.4% for Q3 2016 and 32.7% for the nine-month period compared to the prior year, driven by lower natural gas and NGL prices.
  • 4Production sales volumes increased by 23.9% for Q3 2016 and 25.3% for the nine-month period, demonstrating operational growth despite price pressures.
  • 5The EQT Midstream segment showed strong performance with operating income increasing by 17.4% in Q3 2016 and 9.0% for the nine-month period.
  • 6The company completed significant equity offerings in 2016, raising substantial capital used for acquisitions, including the $412.3 million Statoil acquisition in July 2016.
  • 7Subsequent to the quarter, EQT announced several strategic acquisitions in October 2016, including the Republic Energy and Trans Energy transactions, signaling continued investment in asset growth.

Frequently Asked Questions

For the third quarter of 2016, EQT Corporation reported a net loss attributable to EQT Corporation of $8.0 million, or a loss of $0.05 per diluted share. This is a decline from the net income of $40.8 million, or $0.27 per diluted share, reported in the third quarter of 2015. The decrease was mainly due to lower average realized prices for production sales and reduced gains on derivatives not designated as hedges.

Total operating revenues decreased for both the three and nine-month periods ended September 30, 2016, compared to the prior year. For Q3 2016, revenues were $556.7 million, down from $584.0 million in Q3 2015. For the nine-month period, revenues were $1.23 billion, down from $1.74 billion in the comparable 2015 period. This decline was largely driven by lower realized prices for natural gas, oil, and NGLs.

EQT Corporation has been actively pursuing strategic growth through acquisitions. In July 2016, the company acquired approximately 62,500 net acres from Statoil. Following the quarter end, in October 2016, EQT announced plans to acquire additional Marcellus acres from Republic Energy Ventures and to acquire Trans Energy, Inc. These acquisitions are funded through equity offerings and cash on hand, demonstrating a commitment to expanding its asset base and production capabilities.

EQT utilizes a commodity risk management program, primarily hedging its natural gas sales through NYMEX swaps and collars. The company aims to protect cash flows from significant price fluctuations. Derivative instruments are used to hedge forecasted sales, and the company also enters into fixed-price natural gas sales agreements. The financial statements reflect changes in the fair value of these derivative instruments, impacting recognized gains or losses.