10-QPeriod: Q3 FY2020

EQT Corp Quarterly Report for Q3 Ended Sep 30, 2020

Filed October 22, 2020For Securities:EQT

Summary

EQT Corporation reported a significant net loss for both the three and nine months ended September 30, 2020, a notable increase compared to the prior year period. This widened loss was primarily driven by substantial decreases in operating revenues, influenced by lower commodity prices and strategic production curtailments. While the company recognized a significant gain on the Equitrans Share Exchange, this was offset by increased interest expenses, losses on asset sales/exchanges, and derivative-related losses. Despite the reported net loss, the company generated positive cash flow from operations, though it was lower than the previous year. EQT continues to focus on its deleveraging plan and debt reduction, a key initiative for improving its financial standing. Investors should note the company's ongoing efforts to manage its debt profile and the impact of volatile commodity prices on its financial results. The company's strategic production curtailments, while impacting revenue in the short term, are aimed at optimizing production and cost efficiency. The company's balance sheet shows a decrease in total assets, largely due to a reduction in its investment in Equitrans Midstream and property, plant, and equipment, alongside a decrease in total liabilities.

Financial Highlights

50 data points
Beta

Revenue

$598.99M

28.6% Gross Margin

Net Income

-$600.64M

-100.3% Net Margin

EPS (Diluted)

$-2.35

Total Assets

$17.57B

Cash & Equivalents

$13.67M

Free Cash Flow

-$91.83M

Financial Statements
Beta
Revenue$598.99M
Cost of Revenue$427.69M
Gross Profit$171.30M
SG&A Expenses$51.65M
Operating Expenses$932.32M
Operating Income-$760.20M
Interest Expense$69.15M
Net Income-$600.64M
EPS (Basic)$-2.35
EPS (Diluted)$-2.35
Shares Outstanding (Basic)255.59M
Shares Outstanding (Diluted)255.59M

Key Highlights

  • 1Reported a net loss of $600.6 million ($2.35 per diluted share) for the three months ended September 30, 2020, compared to a net loss of $361.0 million ($1.41 per diluted share) in the prior year period.
  • 2For the nine months ended September 30, 2020, the net loss was $1,030.9 million ($4.03 per diluted share), a significant increase from a net loss of $44.8 million ($0.18 per diluted share) in the corresponding 2019 period.
  • 3Operating revenues decreased significantly, down 22.2% for the three months and 38.4% for the nine months ended September 30, 2020, primarily due to lower commodity prices and reduced sales volumes.
  • 4Recognized a gain on the Equitrans Share Exchange of $187.2 million in the first quarter of 2020, which partially offset the overall net loss.
  • 5Experienced a substantial loss on derivatives not designated as hedges, amounting to $427.2 million for the three months and $11.3 million for the nine months ended September 30, 2020, contrasting with gains in the prior year.
  • 6Net cash provided by operating activities was $1,131.6 million for the nine months ended September 30, 2020, down from $1,633.9 million in the prior year, reflecting lower cash operating revenues and timing of working capital.
  • 7The company continues to execute its deleveraging plan, using proceeds from asset sales and operational cash flow to reduce debt.

Frequently Asked Questions

EQT reported a significant net loss for both the three and nine months ended September 30, 2020. The net loss for the three months was $600.6 million ($2.35 per diluted share), and for the nine months it was $1,030.9 million ($4.03 per diluted share). This represents a widening of losses compared to the same periods in 2019, primarily due to lower operating revenues driven by reduced commodity prices and sales volumes, alongside derivative-related losses and increased interest expenses.

Operating revenues decreased significantly due to lower average realized prices for natural gas, NGLs, and oil, coupled with reduced sales volumes. The company implemented strategic production curtailments which contributed to lower volumes. Fluctuations in the fair market value of derivative instruments not designated as hedges also significantly impacted reported operating revenues, resulting in a substantial loss for the period.

EQT is actively pursuing a deleveraging plan focused on reducing debt through asset monetizations and increased free cash flow. The company utilized proceeds from asset sales and the Equitrans Share Exchange, along with operational cash flow, to manage its debt obligations. The issuance of Convertible Notes in April 2020 also provided funds used for debt repayment. Despite a reduction in total liabilities, the company's debt profile and credit ratings remain a key focus.

Commodity price volatility, particularly for natural gas and oil, continues to be a significant factor impacting EQT's revenues and profitability. The COVID-19 pandemic has exacerbated this volatility, affecting global demand and leading to significant price fluctuations. While EQT has a higher exposure to natural gas, which has shown some price resilience due to production cuts from oil operations, overall market uncertainty remains high. The company's outlook and financial performance are substantially dependent on future commodity prices and the broader economic environment.