EQT shifts focus from growth to cost savings

EQT is shifting its focus this year to cost savings and increasing cash flow after investors expressed disappointment over its performance since the independent producer acquired Rice Energy in 2017, making it the largest US natural gas producer.

Executives said on an earnings call today that the new management team has successfully shifted the company's focus to development, optimization and efficiencies. Pittsburgh-based EQT last month announced it would lay off workers in pursuit of $50mn in savings but declined to say how many positions had been eliminated. The company later said it had identified an additional $50mn in cost savings.

EQT has begun to implement those cost savings and will work to find more in the coming months in order to boost its 2019 cash flow by 7pc to $2.9bn, chief executive Robert McNally said.

The northern Appalachia-focused producer will shift from a high of 12 fracturing crews in the middle of 2018 to an ongoing operation of five to seven crews throughout this year, likely leading to fluctuations in quarterly volumes as the year progresses.

EQT's fourth quarter production was 4.3 Bcfe/d of natural gas equivalent (Bcfe/d) (122mn m³e/d), exceeding the higher end of its guidance and 5pc higher than the third quarter. The quarterly output represented a 34pc rise on the year.

The company brought 81 wells on line in the third quarter of 2018 followed by 45 wells in the fourth quarter, with fourth quarter output rising on the increased activity in the prior quarter. As a result of fewer wells brought on line in the fourth quarter, EQT expects its first quarter output to fall to a range of 4-4.2 Bcfe/d.

Full year output was 4.1 Bcfe/d, 68pc higher than a year earlier, driven by the Rice Energy acquisition.

EQT in 2018 sold its Permian basin assets in Texas for $57mn and its non-core Huron assets in southern Appalachia for $524mn.

EQT reported a loss of $2.4bn in the fourth quarter compared with profits of $1.4bn a year earlier.