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EQT Corp (EQT) Set to Gain From Higher Natural Gas Prices

EQT Corporation EQT is set to make record profits this year, as the outlook for the medium term suggests that energy prices will remain high. The strong commodity prices will likely drive the financial success of the company.

The price of natural gas has improved significantly in the past year. The strong commodity price is aiding EQT’s upstream operations, as it is a pure-play Appalachian explorer, one of the largest natural gas producers in the United States.

EQT Corp is strategically positioned in the core of southwest Appalachia, which is connected to all major long-haul takeaways. EQT employs advanced technologies like horizontal drilling to operate in the prolific gas basin.

EQT Corp has a huge inventory of drilling locations in the core Appalachian Basin that could provide significant production volumes. The undeveloped sites have brightened the prospects of EQT’s future natural gas production. This makes it well-positioned to capitalize on the mounting clean energy demand.

EQT has lower exposure to debt capital than composite stocks belonging to the industry. Hence, the upstream energy player can rely on its strong balance sheet to sail through the volatility in commodity prices. Apart from reducing its debt load, EQT is focused on generating strong free cash flows and rewarding its shareholders. The company recently doubled its share repurchase authorization to $2 billion.

Moreover, of the total greenhouse-gas emission reductions in the United States since 2005, the contribution of EQT is roughly 5%. The upstream player aims to achieve net-zero Scope 1 and Scope 2 emissions by 2025.

The current financial position of upstream energy companies is at an all-time high. The favorable outcomes are set to improve this year, owing to a perfect storm of factors pushing profits. Companies like Range Resources Corporation RRC, Antero Resources AR and Cheniere Energy Inc. LNG will continue to witness gains as the commodity price trajectory is expected to remain healthy.

Range Resources is among the top 10 natural gas producers in the United States. RRC’s board of directors authorized a $500-million share repurchase program, which is likely to be funded with the company’s free cash flow generation.

Range Resources is focusing on cost improvement and marketing strategies to increase its margins. Owing to the peer-leading well cost and low maintenance capital requirements, the company is likely to generate free cash flow in the near term. RRC expects free cash flow to exceed $1.5 billion this year, which could be the highest among Appalachian players.

Antero Resources has positioned itself among the fast-growing natural gas producers in the United States. AR boasts 451,000 and 91,000 net acres in Marcellus and Utica, respectively, which will likely boost its production. Its core acreage position allows for significant long lateral drilling opportunities and capital efficiencies.

Antero Resources has been benefiting from declining well costs in the Marcellus play. Being a leading natural gas producer, the firm emits lower greenhouse gases than other oil majors. AR is well-positioned to capitalize on the rising natural gas prices. It is prioritizing reducing debt. From 2019 through August 2022, AR managed to lower the absolute debt load by $2.2 billion.

Although Cheniere does not primarily produce natural gas, it is a global provider of clean, secure and affordable liquefied natural gas. Given the first-mover advantage in the LNG export market, Cheniere is primed for significant revenue and earnings growth on the back of long-term contracts and solid operations.

LNG shipments for export from the United States have been robust for months on the back of environmental reasons and record higher prices of the super-chilled fuel elsewhere. Most analysts believe that deliveries are poised for further gains this year on surging consumption in Europe and Asia. This augurs well for Cheniere Energy, the dominant U.S. LNG exporter.

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Range Resources Corporation (RRC) : Free Stock Analysis Report
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Antero Resources Corporation (AR) : Free Stock Analysis Report
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