EQT Corp Beats on Q2 Earnings, Misses Revenues, Guides Well

Integrated energy player, EQT Corporation's EQT second-quarter 2014 adjusted earnings per share increased to 81 cents from 57 cents in the year-earlier quarter. This also came above the Zacks Consensus Estimate of 80 cents.

Net operating revenue in the quarter was up 11.2% year over year at $526.2 million. However, reported revenues came much below the Zacks Consensus Estimate of $598.0 million.

Segment Details

EQT Production's second-quarter operating revenue increased 5.2% year over year to $322.1 million. This was due to steady focus on Marcellus Shale, where sales volume rose 24.6% year over year to 85.8 billion cubic feet equivalent (Bcfe). Sales volume from Marcellus/Upper Devonian averaged 943.4 million cubic feet equivalent per day (MMcfe/d), 25% higher than the year-ago period. Natural gas liquids NGL volume totaled 1,326 Mbbls, 15% higher than the year-ago period.

Operating income rose 37.7% year over year to $144.7 million.

Under the EQT Midstream segment, net gathering revenues increased 4.8% year over year to $91.2 million, owing to 17% growth in gathered volumes. Net transmission revenues increased 32.7% year over year to $51.5 million. Net storage, marketing and other operating revenues were $9.6 million, representing a 74.8% year over year rise.

Operating income rose 22.5% year over year to $88.5 million.

Cash Flow
 
The company's adjusted operating cash flow was $317.2 million during the quarter, reflecting a decrease of 0.6% year over year. During the quarter, EQT repurchased 0.3 million shares under the ongoing one million share repurchase authorization.

Wells Spud

The company spud 89 gross wells during the quarter. Of these, 55 wells were targeted in Marcellus with an average length-of-pay of 6,140 feet; 22 wells were targeted in Huron with an average length-of-pay of 5,970 feet; 11 wells were targeted in the Upper Devonian with an average length-of-pay of 6,960 feet; and 1 well was targeted the Wolfcamp with a length-of-pay of 7,000 feet.

Guidance

Production sales volume for 2014 is projected at 465–480 Bcfe, up 24% year over year; and liquids volume is expected at 6,500–6,600 thousand barrel of oil equivalent (MBBl). Production sales volume for third-quarter 2014 is projected at 118–122 Bcfe; and liquids volume is expected at 1,800–1,900 MBBl.

Zacks Rank
 
The company currently holds a Zacks Rank #2 (Buy). Meanwhile, one can also consider other energy sector stocks such as Swift Energy Co. SFY, Vermilion Energy Inc. (VET) and Clayton Williams Energy, Inc. CWEI. All these stocks currently sport a Zacks Rank #1 (Strong Buy).