EQT’s Hedging Activities Increased Its Natural Gas Price
EQT Stock on a Downtrend: Driven by Crude Oil, Natural Gas
EQT’s hedging advantage
For 3Q15, natural gas hedging activities increased EQT’s (EQT) average realized natural gas price by $0.67 per Mcf (thousand cubic feet). As we already saw in the previous part of this series, the 3Q15 average realized price for EQT’s gas production was $2.83 per Mcf. This means that the commodity hedging activities increased EQT’s average realized natural gas price by ~31%.
EQT’s 2015 hedges on natural gas
EQT has hedged its 2015 natural gas production. As shown in the above graph, for 2015, EQT had fixed price hedges on natural gas for 75 Bcf (billion cubic feet) at $4.04 per Mcf.
As of September 30, 2015, EQT had derivative coverage for ~14% of forecast natural gas production for 2015.
EQT’s future hedges on natural gas
As you can see in the above graph, for 2016, EQT has fixed price hedges on natural gas for 248 Bcf at $3.81 per Mcf. As of September 30, 2015, EQT had derivative coverage for ~40% of forecast natural gas production for 2016.
For 2017, EQT has fixed price hedges on natural gas for 103 Bcf at $3.66 per Mcf.
EQT’s production costs
For 3Q15, EQT’s total production cost, including LOE (lease operating expense), production taxes, SG&A (selling, general, and administrative) costs, and gathering and transmission costs, was $0.74 per Mcfe (million cubic feet equivalent). That’s ~12% lower when compared to 3Q14.
In 3Q15, EQT’s LOE was $0.12 per Mcfe, which is ~14% lower when compared to 3Q14.
Oil and gas producers
Other SPDR S&P 500 ETF (SPY) upstream companies such as Murphy Oil (MUR), Pioneer Natural Resources (PXD), and Noble Energy (NBL) have LOEs of $9.62 per boe, $6.82 per boe, and $3.81 per boe, respectively.
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