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EQT Corporation’s (EQT - Free Report) shares have jumped 67.5% year to date compared with 38.5% growth of the composite stocks belonging to the industry. The Zacks Rank #3 (Hold) stock has witnessed upward estimate revisions in the past 60 days.
Image Source: Zacks Investment Research
Let’s delve into the factors behind the stock’s price appreciation.
What’s Favoring the Stock?
EQT Corp is a pure-play Appalachian explorer. It is one of the largest natural gas producers in the United States. As the price of natural gas has skyrocketed over the past few months, the company is well-positioned to capitalize on the rising commodity price.
EQT Corp has a massive inventory of drilling locations in the core Appalachian Basin, which could provide significant production volumes. At 2021-end, the company had total proved reserves of 25 trillion cubic feet equivalent (Tcfe), up 26% from the 2020 levels of 19.8 Tcfe.
In the core Marcellus resource, EQT Corp has more than 1,800 net undeveloped locations, providing an inventory of 15 years of drilling at the current maintenance pace. The undeveloped sites have brightened up the prospects of the company’s natural gas production.
Moreover, EQT Corp is uniquely positioned to take an active role in addressing climate change. Being a leading natural gas producer, the firm emits lower greenhouse gases compared with major oil-producing companies. The company expects to achieve net-zero emissions from Scope 1 and 2 within 2025.
For 2022, EQT Corp projects the generation of $1.4-$1.75 billion of free cash flow. The upstream energy firm is anticipating generating more than $10 billion of free cash flow through 2026 from 2021. As the scope of free cash flow generation looks promising, EQT Corp is expecting ample room to reward shareholders with dividend hikes.
Overall, the company is expecting its upstream operations, spreading across the cores of the prolific Marcellus and Utica shale plays, to get stronger on the mounting demand for cleaner energy.
Risks
EQT Corp’s lack of geographic diversification is concerning since the majority of its asset base is located in the Appalachian Basin. As such, it is more vulnerable to basin-specific delays and interruptions in production from wells, which can potentially hamper growth. Also, investors have been worried as the company incurred a $3.8-billion loss last year on derivatives.
Eni SPA (E - Free Report) is among the leading integrated energy players in the world. As of Dec 31, 2021, the company’s net proved reserves were reported at 6,628 million Boe. Eni currently has a Zacks Style Score of A for Value and Momentum, and B for Growth.
Eni’s earnings for 2022 are expected to increase 103.3% year over year. Through 2021, the company managed to drill several development wells. This backed it to produce 1,682 thousand barrels of oil equivalent per day (MBoe/d) in 2021. The total production volumes comprise 48.3% liquid.
Equinor ASA (EQNR - Free Report) is one of the premier integrated energy companies in the world, with operations spreading across 30 countries. At 2021-end, EQNR had estimated proved reserves of 5.356 billion BOE.
Equinor’s earnings for 2022 are expected to increase 56.8% year over year. For 2022, Equinor announced the increase of the share buyback program of up to $5 billion. Moreover, the energy major increased its quarterly dividend to 20 cents per share from the prior dividend of 18 cents.
Centennial Resource Development, Inc. is an independent oil and gas exploration and production company. As of Dec 31, 2021, CDEV’s total proved reserves of 305 million barrels of oil equivalent increased 2.1% year over year.
Centennial Resource’s earnings for 2022 are expected to increase 131.9% year over year. At the end of the fourth quarter, CDEV had a net debt to capitalization of 23.1%. The company’s debt-to-total capital ratio has persistently been lower than the industry since last year, reflecting lower debt exposure. This can provide it with financial flexibility for growth projects.
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EQT Corp (EQT) Stock Surges 67.5% YTD: What's Driving It?
EQT Corporation’s (EQT - Free Report) shares have jumped 67.5% year to date compared with 38.5% growth of the composite stocks belonging to the industry. The Zacks Rank #3 (Hold) stock has witnessed upward estimate revisions in the past 60 days.
Image Source: Zacks Investment Research
Let’s delve into the factors behind the stock’s price appreciation.
What’s Favoring the Stock?
EQT Corp is a pure-play Appalachian explorer. It is one of the largest natural gas producers in the United States. As the price of natural gas has skyrocketed over the past few months, the company is well-positioned to capitalize on the rising commodity price.
EQT Corp has a massive inventory of drilling locations in the core Appalachian Basin, which could provide significant production volumes. At 2021-end, the company had total proved reserves of 25 trillion cubic feet equivalent (Tcfe), up 26% from the 2020 levels of 19.8 Tcfe.
In the core Marcellus resource, EQT Corp has more than 1,800 net undeveloped locations, providing an inventory of 15 years of drilling at the current maintenance pace. The undeveloped sites have brightened up the prospects of the company’s natural gas production.
Moreover, EQT Corp is uniquely positioned to take an active role in addressing climate change. Being a leading natural gas producer, the firm emits lower greenhouse gases compared with major oil-producing companies. The company expects to achieve net-zero emissions from Scope 1 and 2 within 2025.
For 2022, EQT Corp projects the generation of $1.4-$1.75 billion of free cash flow. The upstream energy firm is anticipating generating more than $10 billion of free cash flow through 2026 from 2021. As the scope of free cash flow generation looks promising, EQT Corp is expecting ample room to reward shareholders with dividend hikes.
Overall, the company is expecting its upstream operations, spreading across the cores of the prolific Marcellus and Utica shale plays, to get stronger on the mounting demand for cleaner energy.
Risks
EQT Corp’s lack of geographic diversification is concerning since the majority of its asset base is located in the Appalachian Basin. As such, it is more vulnerable to basin-specific delays and interruptions in production from wells, which can potentially hamper growth. Also, investors have been worried as the company incurred a $3.8-billion loss last year on derivatives.
Key Picks
Investors interested in the energy sector might look at the following companies that presently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Eni SPA (E - Free Report) is among the leading integrated energy players in the world. As of Dec 31, 2021, the company’s net proved reserves were reported at 6,628 million Boe. Eni currently has a Zacks Style Score of A for Value and Momentum, and B for Growth.
Eni’s earnings for 2022 are expected to increase 103.3% year over year. Through 2021, the company managed to drill several development wells. This backed it to produce 1,682 thousand barrels of oil equivalent per day (MBoe/d) in 2021. The total production volumes comprise 48.3% liquid.
Equinor ASA (EQNR - Free Report) is one of the premier integrated energy companies in the world, with operations spreading across 30 countries. At 2021-end, EQNR had estimated proved reserves of 5.356 billion BOE.
Equinor’s earnings for 2022 are expected to increase 56.8% year over year. For 2022, Equinor announced the increase of the share buyback program of up to $5 billion. Moreover, the energy major increased its quarterly dividend to 20 cents per share from the prior dividend of 18 cents.
Centennial Resource Development, Inc. is an independent oil and gas exploration and production company. As of Dec 31, 2021, CDEV’s total proved reserves of 305 million barrels of oil equivalent increased 2.1% year over year.
Centennial Resource’s earnings for 2022 are expected to increase 131.9% year over year. At the end of the fourth quarter, CDEV had a net debt to capitalization of 23.1%. The company’s debt-to-total capital ratio has persistently been lower than the industry since last year, reflecting lower debt exposure. This can provide it with financial flexibility for growth projects.