EQT Earnings Shine, Outlook Bright (EPL) (EQT) (LGP) (RRC)

EQT Corporation’s (EQT) first quarter 2013 adjusted earnings increased 37.5% year over year to 66 cents per share from 48 cents in prior year period and surpassed the Zacks Consensus Estimate of 52 cents. The year-over-year increase was primarily attributable to higher production sales, improved gathered volumes and transmission throughput as well as higher sales at distribution, partially offset by lower realized commodity prices.

Net operating revenue in the quarter was up 25.2% year over year at $458.1 million and ahead of the Zacks Consensus Estimate of $449.0 million.

Segment Details

EQT Production's first quarter operating revenues increased 28.2% year over year to $250.5 million as average daily sales volume rose nearly 48.5%.

Operating income increased 25.5% year over year to $74.1 million.

Under the EQT Midstream segment, net gathering revenue surged 18.1% year over year to $81.8 million, owing to 42.2% growth in gathered volumes. Net transmission revenue increased 62.6%. Net storage, marketing and other operating revenue averaged $9.8 million, representing a $5.2 million decline.

Operating income jumped 32.2% year over year to $74.2 million in the reported quarter.

EQT Distribution’s net operating revenue increased 24.2% year over year to $78.7 million.

The segment generated an operating income of $52.3 million versus the year-ago level of $36.8 million.

During the quarter, net operating expense increased 21.4% year over year to $259.5 million.

Financials

The company’s operating cash flow was $304.4 million during the quarter, reflecting an increase of 33.6% year over year.

EQT’s capital expenditure totaled $304 million, with $247 million spent on EQT Production, $51 million on EQT Midstream and $6 million on EQT Distribution.

Guidance

The company has increased its production sales volume guidance to 340–350 Bcfe from its earlier estimated 2013 volume of 335 Bcfe, which is 33% higher than 2012. EQT has also forecasted 2014 production sales volume at 445 Bcfe.

Ranks

The company holds a Zacks Rank #3, which translates to a short-term Hold rating. However, there are other Zacks Ranked #1 (Strong Buy) stocks – Range Resources Corporation (RRC), Lehigh Gas Partners LP (LGP) and EPL Oil & Gas, Inc. (EPL) – in the oil and gas sector that are expected to outperform the market in the coming one to three months.