ETRN - EQT Corporation: Tight-Fisted Management When It Is Needed

2024-05-14 10:47:02 ET

Summary

• EQT Corporation is generating free cash flow despite lower natural gas prices, thanks to its successful acquisition strategy and tight control of costs.
• The company is vertically integrating to lower costs and improve its survival as an independent company.
• The Equitrans Midstream acquisition is expected to reduce breakeven costs significantly, increase cash flow, and improve long-term dividend prospects.
• Increasing electrical use is likely to be generated using natural gas in the United States.
• The Equitrans acquisition pace is likely to slow in the future.

EQT Corporation ( EQT ) is dealing with lower natural gas prices (NG1:COM) just like the rest of the industry. Management managed to generate free cash flow at a time when others are struggling to get cash flow. Clearly, the acquisition strategy to lower costs is working. This management is increasing company profitability at a time when many competitors can only "grin and bear it." When natural gas prices recover, a low-cost producer like this one should be a stellar performer that far outperforms industry averages. Lowering the company breakeven through an acquisition now may well begin the stock price recovery cycle ahead of many competitors.

Equitrans Midstream Acquisition

The last article mentioned how this management avoided the risk and the accompanying cost overruns associated with the risk of building the pipeline that the company wants to acquire. Instead, shareholders receive the benefits of the completed project while only paying for what the company believes that project is worth to shareholders. That probably saved shareholders a lot of money....

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