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A Close Look at EQT’s Debt Position

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EQT’s net debt-to-EBITDA

EQT’s (EQT) net debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) has been on a falling trend since 3Q15. It has mirrored the movements in its net debt, which has also fallen in the same period.

The company’s net debt-to-EBITDA ratio is currently trading at ~1.3x.

The spike in EQT’s EV-to-EBITDA ratio in 3Q15, as you can see in the above graph, was due to higher debt. Its net debt increased to ~$1.7 billion in 3Q15, from $1.3 billion in 2Q15. However, EQT has since reduced its net debt from those levels. While its trailing 12-month EBITDA has also declined year-over-year, the decline in its net debt has resulted in a fall in its EV-to-EBITDA ratio.

EQT’s 1Q16 net debt was ~$1.2 billion compared to $1.5 billion in 1Q15. Its trailing 12-month EBITDA as of 1Q16 was $983 million compared to ~$1.4 billion in 1Q15.

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Peer group comparison

In comparison, Cabot Oil & Gas’s (COG) trailing 12-month EBITDA fell by 53.3%, and Noble Energy’s (NBL) fell 22%. On the other hand, Antero Resources (AR) saw its trailing 12-month EBITDA for 1Q16 rise by ~1%.

Together, these companies make up 8.6% of the iShares US Oil & Gas Exploration & Production ETF (IEO).

Liquidity and financial position

EQT has noted that it had $1.6 billion in cash and cash equivalents as of March 31, 2015. It also has $1.5 billion from an undrawn, unsecured revolving credit facility.

Next, we’ll see what credit rating agencies are saying about EQT.

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