EQT Corp. Upgraded – Analyst Blog

We have recently upgraded EQT Corporation (EQT) to “Neutral” from “Underperform”.

 

EQT is an integrated energy company with an emphasis on natural gas supply activities in the Appalachian area, including production and gathering, natural gas distribution and transmission, and energy efficiency solutions, primarily in the eastern and western coastal regions of the United States.

 

EQT Corporation continues to deliver consistent production growth on the back of its sizable acreage position in the Huron Shale and Marcellus Shale plays. The company has recently purchased approximately 58,000 net acres in the Marcellus Shale. Increased holdings and solid drilling results help the company to raise this year’s production 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, the company’s superior cost structure and above-average growth may help alleviate concerns related to struggling natural gas prices. In addition, the company’s recent stock offering helps to reduce debt level and increase capital budget. EQT raised its 2010 capital budget by $350 million to $1.2 billion.

 

While the outlook for natural gas remains bleak, EQT’s position as a low cost operator allows for the development of reserves and production in a low price environment.