To accelerate development of its Marcellus and Huron/Berea plays’ properties, EQT Corporation (EQT) has announced 12.5 million shares of its common stock offering.
Early last week, the company announced its intention to buy approximately 58,000 net acres in the Marcellus Shale from a group of private operators and landowners in a stock and cash deal.
Management is confident about the company’s capability to profitably develop these assets as EQT already has extensive midstream assets to gather and transport natural gas to the lucrative eastern markets.
With this stock offering, the company increased its capex budget for this year to $1.2 billion from $850 million. Of this, 75% will go towards drilling wells, nearly 22% towards pipeline and compression to gather and transport the gas to markets and the balance 3% is earmarked for distribution infrastructure projects and other corporate items.
Given EQT’s positive stance for Marcellus and Huron properties as well as the increase in capex budget, the company increased its previous sales growth target to 26% from 20%. It also believes that this growth rate will remain at par in 2011.
As EQT is a low cost producer with a strategic midstream presence, we believe the company’s superior cost structure and above-average growth may help in surpassing the concerns related to weak natural gas prices.
“EQT” Free Stock Analysis: Buy? Sell? Hold?
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