Jun. 15 at 7:54 PM
$EQT starting to look interesting - watchlist
FY26 Fwd P/E: 10.8x
FCF Yield: 7.2%
EV/EBITDA: 5.4x
Net Debt/EBITDA: 1x
Remaining Buyback Auth:
$1.4B
B/E:
$2.1/MMBtu
Fitch: upgrade to BBB
Issue: realized price variability resulting in a tight op margin
Back of napkin:
- Local realized spot:
$2.40 -
$0.75 (discount) =
$1.65
- Current blended realized price = [(60% x Spot (
$1.65)] + (40% x Hedge (
$3.50 or 1 leg of collar) =
$2.39
- All-In Production Cost: -
$1.09/Mcfe (guide
$1.03-
$1.17)
- Net Unit Margin: +
$1.30/Mcfe
- Op Margin:
$0.30/MMBtu
- 2Q26 Total sales volume est: 603Bcfe (guide 570-620)
B/c economic margin is so narrow, EQT chosing to choke back 10-15 Bcfe of production - make no sense to sell for tiny margin
Current strip implies modest cost structure improvement once contracts commence; cost structure improves
$0.02 per 1 MTPA for each
$1 of positive spread
Watching the local Appalachian price is the single most important variable for this trade
Swap market implying the physical Appalachian spot price to remain pinned near its current
$2.40–
$2.47 level all summer but increasing to
$2.92–
$2.95/MMBtu in 4Q26-1Q27
