EQT’s stock performance
Following EQT’s (EQT) second-quarter earnings release on July 26, its stock fell ~2%. The decline was due EQT missing the revenue and earnings estimates in the second quarter. The stock fell 8.26% on July 27. A drop in crude oil prices (DBO) on July 27 intensified the decline. Crude oil prices fell 1.32% on July 27.
On a YoY (year-over-year) basis, EQT stock has declined ~25.62%. Compared to the energy sector, EQT has underperformed, as you can see in the above graph. The Energy Select Sector SPDR (XLE) has increased ~15.15% YoY. EQT stock has also underperformed the broader market SPDR S&P 500 ETF (SPY), which has risen 13.84% YoY.
Midstream separation and other key updates
On February 21, EQT announced its plans to spin off its midstream business and streamline its midstream operations. To achieve this goal, the company laid out several steps.
Providing an update on the goals in the second-quarter earnings release, EQT noted that it closed the sale of its Ohio gathering assets to EQT Midstream Partners (EQM) for $1.15 billion in cash and 5.9 million EQT Midstream Partners units on May 22. On the same day, the company also closed the sale of Rice Midstream Partners’ IDRs to EQT GP Holdings (EQGP) for 36.3 million EQT GP Holdings units. On July 23, EQT Midstream Partners completed the acquisition of Rice Midstream Partners in a unit-for-unit transaction with an exchange ratio of 0.3319.
EQT plans to retain 19.9% of the shares of the new midstream company—SpinCo. EQT’s management plans to dispose of its retained SpinCo shares after the spin-off. The proceeds from the sale will be used to reduce EQT’s post-spin debt and to fund its stock buyback program. EQT’s management noted that its board authorized a $500 million share repurchase program effective immediately.
Next, we’ll discuss EQT’s operational performance and key updates.