10-QPeriod: Q1 FY2021

EQT Corp Quarterly Report for Q1 Ended Mar 31, 2021

Filed May 6, 2021For Securities:EQT

Summary

EQT Corporation reported a net loss of $40.5 million for the first quarter of 2021, an improvement from a net loss of $167.1 million in the same period of 2020. This improvement was driven by significantly higher sales of natural gas, natural gas liquids (NGLs), and oil, along with gains from investments. Total operating revenues decreased by 14.2% to $949.9 million from $1.1 billion in the prior year, primarily due to a large unrealized loss on derivatives not designated as hedges in Q1 2021, compared to a gain in Q1 2020. Despite the overall revenue dip, the company saw a substantial increase in sales of natural gas, NGLs, and oil by 58.1%, reflecting higher sales volumes and prices. The company's operational focus is evident in the increased sales volumes from the Marcellus shale. EQT ended the quarter with a stronger cash position, with cash and cash equivalents increasing to $40.7 million from $18.2 million at the end of 2020. The company also reported progress in managing its debt, with a significant reduction in current debt obligations.

Financial Highlights

50 data points
Beta

Revenue

$1.13B

60.6% Gross Margin

Net Income

-$37.43M

-3.3% Net Margin

EPS (Diluted)

$-0.13

Total Assets

$18.04B

Cash & Equivalents

$40.67M

Free Cash Flow

$148.64M

Financial Statements
Beta
Revenue$1.13B
Cost of Revenue$445.78M
Gross Profit$685.17M
SG&A Expenses$45.01M
Operating Expenses$941.08M
Operating Income$8.85M
Interest Expense$70.47M
Net Income-$37.43M
EPS (Basic)$-0.13
EPS (Diluted)$-0.13
Shares Outstanding (Basic)278.85M
Shares Outstanding (Diluted)278.85M

Key Highlights

  • 1Net loss attributable to EQT Corporation improved to $40.5 million in Q1 2021, compared to $167.1 million in Q1 2020.
  • 2Total operating revenues decreased by 14.2% to $949.9 million, largely influenced by derivative accounting, while sales of natural gas, NGLs, and oil increased by 58.1% to $1.13 billion.
  • 3Sales volume increased by 7.8% to 415,190 MMcfe, primarily driven by higher volumes from the Marcellus shale (+12.0%).
  • 4Cash and cash equivalents increased significantly to $40.7 million from $18.2 million at the end of 2020.
  • 5Operating expenses increased primarily due to higher gathering, processing, and production taxes, while transmission costs decreased.
  • 6The company's credit facility maturity was extended to July 31, 2023, providing continued financial flexibility.
  • 7EQT Corporation maintained compliance with its debt covenants, including a total debt to total capitalization ratio of less than 65%.

Frequently Asked Questions

The primary driver for the improvement in net income was the substantial increase in sales of natural gas, NGLs, and oil, alongside positive contributions from investments. This was partially offset by a significant unrealized loss on derivatives not designated as hedges in Q1 2021, contrasting with a gain in the prior year period, and higher operating expenses such as gathering and processing.

EQT's hedging strategy, specifically for derivatives not designated as hedges, significantly impacted reported revenues. In Q1 2021, a loss of $188.8 million was recognized due to changes in the fair value of these derivatives, which reduced total operating revenues. In contrast, Q1 2020 saw a gain of $389.4 million from these derivatives, which boosted total operating revenues for that period. Investors should look at 'adjusted operating revenues,' a non-GAAP measure that excludes these unrealized derivative impacts, for a clearer view of operational sales performance.

For 2021, EQT expects to spend between $1.025 billion and $1.125 billion on capital expenditures, primarily funded by operating cash flow and its credit facility. The company believes its operating cash flow and credit facility availability will be sufficient to meet its cash requirements for at least the next twelve months and for the long term.

EQT extended its credit facility maturity date from July 31, 2022, to July 31, 2023. During the quarter, net repayments of debt were the primary use of financing cash flows. The company also plans to dispose of its remaining Equitrans Midstream shares to further reduce debt.